workforce, a company can maximize the return in its investment
and gain a competitive advantage in the marketplace.
Creating a learning organization
There isn’t a single way of becoming a learning organization that
is right for all organizations at all times. There are several possi-
ble ways of implementing these principles, depending on the cir-
cumstances of the organization, and the business environment it
operates in.
An organization’s ability to learn is intimately liked to its culture
and its ability to challenge its current mindset. Senior management
need to appreciate that creating a learning organization requires a
fundamental change in organizational thinking and learning issues
need to be addressed as part of all strategic decisions.
A learning organization is adaptable and flexible, ethically aware,
focuses resources on training and development, listens to all its
staff and acts like a single unit. The leaders of such organizations
are stewards, teachers and facilitators. They are responsible for
building the organization where people continually expand their
capabilities to understand complexity, clarify vision and improve
the mental models and corporate mindset.
A learning culture cannot be imposed on an organization from the
outside. All of the organization’s attributes need to be tuned for
the learning process. These attributes include:
organizational structure;
organizational culture;
processes and systems;
strategy; and
control and procedures.
Managing Operational Risk in Financial Markets
Creating a learning organization
Creating learning organizations requires a change in strategic
thinking, development and training of the staff and redesign of
organizational hierarchies. There are a number of characteristics
and practices that can be developed within an organization that
would facilitate a learning culture.
In today’s global, technologically advanced and customer focused
institutions, change is inevitable. The success of a financial insti-
tution depends on its ability to manage change. In the fast paced
and increasingly electronic financial environment, resilience to
change is probably the most important asset. A learning organi-
zation needs to embrace change and thrive on it. Organizations
need to develop staff who are focused; are flexible in responding
to uncertainty; can manage ambiguity in a structured way; and are
proactive in managing change rather than reacting to it.
The management and the organizational culture should encourage
and promote an experimental mindset. Individuals and teams
must be able to question all aspects of the business and venture
into uncharted waters. Failures and successes have important
lessons for the organization. There should be mechanisms to store
the information about failures and successes; this can form the
basis for future decision making. Experimentation also provides
the mechanism for fundamentally questioning and testing the cor-
porate mindset and assumptions; this provides a better under-
standing of the key drivers and their interrelationships.
With organizations becoming more decentralized and federal in
nature and companies forming close and mutually beneficial rela-
tionships with other organizations, there are opportunities for
financial institutions to learn externally, from their customers or
partners and internally from their employees. There is a need to
move away from the ‘not invented here’ syndrome and towards
using the best available ideas. Benchmarking is a technique that is
often used for external learning. Benchmarking involves:
Learning about your own practices, strengths and weaknesses.
9 The learning organization
Creating a learning organization
Seeking out a wide range of other organizations that you may
think you can learn from and understanding what are the best
available options and processes.
Rather than merely copying the practices of other organ-
izations, there is a need to build on and adapt these
processes to create solutions more suited to your own
Continuously improve the processes.
Benchmarking allows the organization to identify the gaps
between its own processes and the best practice. Rather than
incremental improvement in performance, benchmarking offers
leapfrog opportunities enabling companies to make dramatic
gains. External learning of this type provides a number of distinct
advantages for the organization.
It accelerates the rate of change.
It can identify break-through improvements.
It results in improved customer service.
It can provide competitive advantage.
It provides a fact-based decision-making process.
It creates a consensus climate.
The staff within the organization are probably best placed
to see the shortcomings with the processes and the actions that
need to be taken to improve the operation. With staff empower-
ment, the organization can tap into this expertise and design more
efficient processes. According to Richard Whiteley’s ‘iceberg of
problems known to the top managers: 4%
problems known to general supervisors: 9%
Managing Operational Risk in Financial Markets
Creating a learning organization

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