Risk Culture and Risk Management in the Australian Public Sector.

Abstract

This thesis examines how risk culture influences the use of risk management in decision-making in Australian public sector organisations. Specifically, it investigates whether organisational members' beliefs and attitudes about risk management affect their use of risk management in decision-making, and how different internal organisational environments (hereafter referred to as risk cultural environments) and risk management mechanisms may influence organisational members' beliefs and attitudes and the use of risk management for that purpose. The research objective was addressed by drawing on the organisational culture literature, which posits that organisational cultures may emerge from the basic underlying assumptions (BUAs) of members (i.e. a member's beliefs and attitudes) and an organisation's 'artefacts' (i.e. the visible objects, internal organisational environments and mechanisms in an organisation). A two-stage mixed methods approach was used for this study. In Stage 1, four public sector organisations were analysed using interviews and document analysis, while Stage 2 involved the examination of three public sector organisation case studies. The study found that the majority of executives and operators believed in the usefulness of risk management for compliance and assessment of downsides and that they used risk management for these purposes. However, there were conflicting or fragmented BUAs about the usefulness of risk management in strategic or operational decision-making, and risk management was used infrequently for this purpose. A strong controlling environment with a standard set of formal mechanisms resulted in risk management for compliance and assessing downsides and led to negative effects associated with generic or defensive risk management. Members, who thought risk management was useful for decision-making and used it for this purpose, were largely experiencing the positive effects of a collaborative risk cultural environment and informal mechanisms, including sharing knowledge, openness, participation, customisation, which stimulate members' thoughts. The study also found the existence of interactions between different risk cultural environments and risk management mechanisms, which may have implications for the integration of risk management in decision-making by public sector organisations. Other positive influences on members' BUAs and their use of risk management included the modelling of behaviours and BUAs by senior management, and the promotion of collaborative, innovative and goal-oriented risk cultural environments and informal risk mechanisms. Middle management was also important in facilitating communication and discussion about risk and increasing the relevance of risk management to members' day-to-day jobs. The types and severity of risks were also found to have an influence on members' BUAs and their use of risk management. Show more