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Open AccessArticle

Risk Culture and the Role Model of the Honorable Merchant

University of Applied Sciences, Kaiserslautern—Zweibrücken, Amerikastrasse 1, 66482 Zweibrücken, Germany
DZ BANK, 60265 Frankfurt, Germany and House of Finance, Goethe University, Theodor-W.-Adorno-Platz 3, 60323 Frankfurt, Germany
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2018, 11(3), 40;
Received: 23 June 2018 / Revised: 9 July 2018 / Accepted: 12 July 2018 / Published: 13 July 2018
(This article belongs to the Special Issue Financial Crises, Macroeconomic Management, and Financial Regulation)
PDF [449 KB, uploaded 13 July 2018]


The current discussion about a “risk culture” in financial services was triggered by the recent series of financial crises. The last decade saw a long list of hubris, misconduct and criminal activities by human beings on a single or even a collective basis in banks, in the industry or in the whole economy. As a counter-reaction, financial authorities called for a guidance by a “new” risk culture in financial institutions based on a set of abstract, formal, and normative governance processes. While traditional risk research in economics and in banking was focused on the statistical aspects of risk as the probability of loss multiplied by the amount of loss, culture is a paraphrase for the behavior in collectives and dynamics of organization found in human societies. Therefore, a “risk culture” should link the normative concepts of risk with the positive “real-world” decision-making in financial services. This paper will describe a novel view on “risk culture” from the perspective of human beings interacting in dynamical and intertemporal commercial relations. In this context “risk” is perceived by economic agents ex−ante as the consequence of the time lag between the present and the uncertain future development (compared to a probability distribution calculated by observers ex−post). For all those individual decisions—to be made under uncertainty—future “risk” includes the so-called “normal accidents”, i.e., failures that will happen at some uncertain point in time but are inevitable, and the only questions are when failure will happen and how to maintain function in the first line of defense. Finally, the shift from an abstract definition of “risk” as a probability distribution to a role model of “honorable merchants” as a benchmark for significant individual decision-making with individual responsibilities for the uncertain future outcome provides a new framework to discuss the responsibilities in the financial industry. View Full-Text
Keywords: risk culture; honorable merchant; decision-making; responsibility risk culture; honorable merchant; decision-making; responsibility

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Bott, J.; Milkau, U. Risk Culture and the Role Model of the Honorable Merchant. J. Risk Financial Manag. 2018, 11, 40.

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J. Risk Financial Manag. EISSN 1911-8074 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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