Stage 1: Define the Target State - Developing the Foundations of a Strong Risk Culture
As risk leaders, our job is to guide our organisations through uncertain times. A key part of this role is creating a strong risk culture that supports our business goals. This blog post, the first in our five-part series on risk culture, focuses on the crucial first step: defining your target state.
Why Define a Target State?
Before we can improve our risk culture, we need a clear picture of what we're aiming for. This target state serves as our North Star, guiding all our efforts to strengthen risk management practices across the organisation.
A well-defined target state:
Aligns risk management with business strategy
Provides a shared vision for all employees
Sets clear expectations for risk behaviours
Helps prioritise improvement efforts
Allows for meaningful measurement of progress
Steps to Define Your Target State
Start with your organisation's strategy
Your risk culture should support your overall business goals. Review your company's mission, vision, and strategic plans. How can a strong risk culture help achieve these objectives?Consider your risk appetite
Every organisation has a different tolerance for risk. Some industries require more caution, while others reward calculated risk-taking. Your target state should reflect the right balance for your business.Involve senior leadership
Get buy-in from the top. Work with executives to understand their vision for risk management. Their support is essential for driving change throughout the organisation.Learn from past experiences
Review past risk events, near-misses, and successes. What cultural factors contributed to these outcomes? Use these insights to shape your target state.Look at industry best practices
While your target state should be unique to your organisation, it's helpful to understand what works well for others in your industry.Define specific behaviours and practices
Move beyond general statements to describe concrete actions and attitudes that represent good risk management. For example:Employees at all levels feel comfortable raising risk concerns
Risk discussions are a standard part of project planning
Managers consider both risks and opportunities when making a decision
Create a clear, concise statement
Distil your target state into a simple statement that's easy to communicate and remember. This becomes your rallying cry for risk culture improvement.
Challenges in Defining the Target State
Setting your target state isn't always straightforward. Here are some common hurdles:
Balancing risk and reward: Finding the right level of risk-taking that supports growth without jeopardising the business.
Aligning diverse perspectives: Different departments may have varying views on what good risk management looks like.
Making it tangible: Translating high-level concepts into specific, observable behaviours.
Avoiding unrealistic ideals: Setting an aspirational yet achievable target state.
Overcoming these challenges often requires open dialogue, compromise, and a willingness to refine your vision over time.
Putting It Into Practice
Once you've defined your target state, share it widely. Use various communication channels to ensure all employees understand the vision for risk culture.
Some effective methods include:
Incorporating the target state into company values statements
Creating visual aids like posters or infographics
Discussing the vision in team meetings and training sessions
Linking the target state to performance expectations and rewards
Remember, defining your target state is just the first step. It sets the direction for all your future efforts to build a strong risk culture.
Next Steps
With a clear target state in place, you're ready to move on to “Stage 2: Assessing your current risk culture”. This assessment phase will reveal the gap between where you are and where you want to be, guiding your improvement strategy.
Building a strong risk culture is a journey, not a destination. By starting with a well-defined target state, you set your organisation on the path to more effective, integrated risk management.
If you'd like help defining your risk culture target state, feel free to reach out via LinkedIn or Submit an Online Enquiry.
I work with risk leaders to create practical, tailored solutions for their unique organisational needs.
