Does Risk Culture Matter for Sustaining the Business? Evidence from Malaysian Environmentally Sensitive Listed Companies

Abstract

The aim of this paper is to examine how organisational risk culture and good risk management practices contribute to the sustainable business. Sustaining business requires a strong foundational of risk culture to address all types of risks. Having a sound risk culture is vital as it influences the way organisations respond to risks and hazards. A poor risk culture and weak risk management practices have triggered many business collapsed and lost with huge amounts. Drawing on the post-modern portfolio theory and stakeholder theory, the model in this study is empirically validated by means of the partial least squares approach to structural equation modelling (PLS-SEM) based on survey data from environmentally sensitive companies in Malaysia. Based on the analysis, the study revealed that risk culture moderates the relationship between the role of leadership and risk resilience of sustainability risk management (SRM) implementation and company survival. This result extend previous research by not only highlighting the importance of risk culture in driving effective SRM practices but also indicating the significance of risk resilience and leadership in sustaining the business. Contribution/Originality: This study provides fresh insights on the importance of risk culture in driving successful SRM practices. It also sheds some light on the importance of leadership and risk resilience for risk culture in the company to be changed. 1. INTRODUCTION The COVID-19 pandemic of 2020 revealed the major weaknesses in the existing guidelines of risk management whereby most organisations had not fully prepared to handle the unknown risks. Undoubtedly, a poor risk culture and lack of pre-emptive measures has resulted to weak risk management function which finally brought to terrible situations and tremendous losses to the businesses due to this pandemic. Risk culture is one of the most significant challenges faced by nearly every company from diverse industries. Sustainability risk management (SRM) is an approach that provides a medium of precaution in an organisation, and opportunities for accelerating business growth and company survival. Having a strong risk culture is vital to effective SRM implementation, as it influences the way an organisation makes sense of risks and hazards. Organizational risk culture is recognised as the most important critical factor for effective risk management practices and strongly influenced by leadership factors (Manab, Kassim, & Hussin, 2010). According to Farrell and

Organizational Culture Management as an Element of Innovative and Sustainable Development of Enterprises

“…Currently, researchers are studying the influence of the organizational culture on the main elements of enterprise management, in the context of Industry 4.0 and the digitalization of production. Additionally, new, more effective methods and tools are needed to reliably assess the impact of organizational culture on the sustainable and innovative development of companies, especially high-tech industries and sectors of the economy facing increasing risks and uncertainty in their activities [7,8]. In general, the problem of resistance to innovation becomes more acute as the mutual influence of organizational culture and the implementation of innovations in high-tech and IT companies increases [9].…”