Recent corporate scandals linked to problematic company cultures have led directors to look for ways to better monitor corporate culture, while trying to understand potential cultural risks and address problems before they get out of control. By treating culture risk as part of an integrated process of oversight that addresses strategy, performance, and risk—and taking a proactive and persistent approach—boards can improve their oversight of culture risk.
A strong culture is an important asset of any organization that should be supported. It is not merely a “soft” issue of interest to investors and the media; rather, it can be critical to the company’s growth and performance. But directors may not know how to most effectively oversee risk, in part because culture is an intangible asset that is difficult to measure or reward. There are, however, some general approaches to culture risk oversight that management and boards alike should consider.
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