RISK QUOTE: Our loyalties must transcend our race, our tribe, our
class, and our nation; and this means we must develop a world
—REV. DR. MARTIN LUTHER KING, JR., CIVIL RIGHTS
RISK QUOTE: Why do they call it rush hour when nothing moves?
—ROBIN WILLIAMS, COMEDIAN
Just as strategic risk is not the responsibility of a single risk owner, cultural exposures are the culmination of multiple units and activities. Subculture risk, sometimes called hierarchy risk, is inherent in a large entity. The concept dates back to the mid-1800s, when growing organizations developed a structure and techniques to manage relationships, tasks, and behavior. Elaborate sets of rules accompanied the growth, so each entity took on a life and behavior of its own—or, more accurately, lives and behaviors of different units.
First, we need to define two terms. Organizational culture is the shared values, attitudes, behaviors, and beliefs of individuals who work together for a common goal. A subculture has its own individual culture that may or may not be aligned with the overall values and behaviors of the entity. Subculture risk refers to problems that occur because unit cultures vary in terms of their ability to operate effectively within a larger structure.