How do you recognize and reward good operational risk culture behaviors and practices in your organization?

I would suggest that 'define and communicate' are two distinct steps. Equally, there is a step before this to actually capture the risks - an understanding of the nature and extent of risk should be the first step (or a validation of the existing risk capture) - as without an appreciation of the risk landscape it is difficult to consider what a 'risk culture' should be, and it becomes an amorphous collection of 'motherhood and apple pie' homilies to "controlling risk"

The initial phase involves defining and articulating the ideal operational risk culture within your organisation. This entails establishing coherent policies, standards, and procedures for identifying, assessing, monitoring, and reporting operational risks while aligning these objectives with strategic goals, values, and the organisational mission. Communicate these expectations across all organisational tiers, offering consistent feedback and guidance to help stakeholders, from senior management to frontline staff, effectively meet them.

Build rewards into the system. And place someone in charge of monitoring the system. Rewards will be less effective if they are not controlled centrally.

The second phase entails fostering an environment conducive to reporting operational risks, incidents, and near misses. Establish a safe and supportive culture where staff can voice concerns without fear of reprisal. Offer accessible reporting channels like hotlines or online platforms, and appreciate reports received. Utilise them to learn from mistakes, enhance processes, and fortify controls, fostering continuous improvement and organisational resilience.

In most organizations, risk issues identified by Audit are looked upon as unfavorable and a negative reflection of the work performed by the team, which can then lead to a culture of suppressing and hiding issues. Instead, if organizations reward and incentivise self-identification of risks and issues, this would encourage a strong risk culture that recognizes and improves proactive risk mitigation.

In the third phase, acknowledge and reward positive behaviours reflecting a strong operational risk culture. Celebrate successes and share achievements of teams managing risks effectively. Offer incentives like bonuses, awards, promotions, or career opportunities aligned with risk culture goals. Avoid rewarding behaviours contrary to risk culture, such as excessive risk-taking or rule violations, ensuring incentives support desired behaviours and reinforce a culture of responsibility and accountability.

In the fourth phase, monitor and measure operational risk culture performance using key indicators like risk awareness, appetite, reporting, and management. Conduct audits, reviews, and surveys to gauge effectiveness and consistency across the organisation. Use findings to identify gaps, strengths, and areas for improvement, adapting strategies accordingly. Utilise results to refine actions, ensuring alignment with organisational objectives and continuous enhancement of operational risk culture.

In the fifth phase, engage and empower staff to shape and uphold operational risk culture. Create avenues for staff to participate in risk discussions, decision-making, and problem-solving. Foster ownership and accountability for risk management within roles. Cultivate a collaborative, trusting environment, encouraging idea-sharing and best practice exchange. By involving and empowering staff, build a resilient risk culture that reflects shared values and promotes continuous improvement.

Este passo é fundamental de que a alta gest?o, come?ando até acima nos conselhos e seus comitês, devem dar o exemplo, para que quem esteja abaixo, sem a mesma experiência e maturidade, siga os exemplos dos líderes, que assim ganham a confian?a;

In the sixth and final stage, lead by example by embodying exemplary operational risk culture behaviours and practices. Set the tone, direction, and standards for the organisation's risk culture, inspiring others to follow suit. Demonstrate integrity, transparency, and accountability, learning from mistakes and supporting staff in effective risk management. By fostering a culture of openness, continuous learning, and support, cultivate an environment where operational risk culture thrives and evolves positively.

Operational risk can be viewed from various perspectives, and each organization may have its unique approach. My perspective is not personal but based on a general understanding of operational risk which pertains to the risks associated with an organization's internal processes, systems, people, and external events that can affect its operations. This risk perspective emphasizes the importance of identifying, assessing, and mitigating risks related to day-to-day activities and the potential impact on an organization's financial stability, reputation, compliance. It's crucial to manage operational risk effectively by implementing processes,controls, and a risk-aware culture to minimize the likelihood of adverse events and their consequences.