ABSTRACT
This chapter argues that an appropriate risk culture, integrated into the corporate strategy, helps organisations to create and gain sustainable organisational value instead of destroying it. The chapter begins by defining a framework that can be used to audit a 3-by-3 matrix as a risk tool to enable boards and top executives to make better decisions. It analyses how Dexia's board and top executives managed to lose enormous organisational value, not only because of bad decision-making resulting from a weak or non-existent risk culture but also because of overconfidence in their strategic choices and opaque—if not outright unethical—behaviour that was aggravated by herd behaviour or groupthink. The chapter suggests that some crucial steps that could have been taken by Dexia to prevent such a disaster. It argues that Dexia did not have a well-functioning integrated risk culture and flagrantly failed to prevent the crystallisation of operational risks, with disastrous consequences.
