In the Seeks Approval Mindset, the first person seeks the approval of the second person. An example would a product manager who is developing a new product and seeks audits approval of the product. A Seeks Approval Mindset, consciously or not, places accountability for risks taken on the second person. They may or may not be very aware of the risks, however the key feature of the Seeks Approval Mindset is that the first person seeks permission and in doing so effectively transfers accountability for the risk to the second person. The second person, the auditor in this example, who approves the decision is in effect taking responsibility for the risk, although they may not fully appreciate this. Simply said, in this case, when things go wrong, the first person can point to the second person and say that they approved the decision. This mindset was the norm for many years and still is the norm in many cases, sometimes embedded in organizational procedures. Now, we should acknowledge that the Seeks Approval Mindset is appropriate when the second person is the direct supervisor of the first person. An effective risk mindset requires a Seeks Approval Mindset aligned to the managerial spine, but not to corporate support roles, in which case it is an abdication of responsibility. I identify three different mindsets that either actor can have which represent a continuum from an immature to mature risk mindset. I label these three: My model of risk mindsets recognizes the different perspectives these two actors can have towards their accountability for risk.
My model of risk mindset focuses on accountability. It generally recognizes there are two key roles that an individual can have in managing risk: The first role is the person whose decisions and actions create and directly influence the risk and the second role is the person whose decisions influence the first role. In both roles, this model of risk mindset applies. Risk mindsets can, based on this definition, be assessed on a number of dimensions. The following are my views on the risk mindsets which are most important to effective risk management. In putting these forward, I acknowledge that other mindsets exist. I do not intend to be exhaustive in my discussion, but rather, I aim only to put forward a view of risk mindsets which I find useful and I hope that you will too. In this article, I will explore risk mindsets from the perspective of accountability for risk.
Therefore, let us define Risk Mindset as the way an individual thinks about risk and how that influences their behaviour. Let us acknowledge that these mindsets are essential to effective risk management. (2013) The A-B-C of Risk Culture, Mindset and Attitudes are synonymous in this context. Understanding Risk Mindsets, based on Hillson’s A-B-C model, is essential to understanding and ultimately shaping risk culture. Organizational culture is regularly cited as being critical to effective risk management. The Bank of International Settlements references culture in two of the five principles for effective corporate governance (Banking Committee on Banking Supervision (2015), Guidelines: Corporate governance principles for banks, Hillson published a paper on risk culture in which he puts forward the A-B-C model of culture: where Attitudes shape Behaviour, which forms Culture.
The Oxford Dictionary defines it as the established set of attitudes held by someone ( en.). Wikipedia defines it as a set of assumptions, methods, or notations held by one or more people or groups of people that is so established that it creates a powerful incentive within these people or groups to continue to adopt or accept prior behaviors, choices, or tools ( en.). Before we answer this: What is mindset and why is it important?Īccording to the Cambridge Dictionary, mindset is a person’s way of thinking and their opinions ( ).
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