Development of a Risk Culture Intensity Index to Evaluate the Financial Market in Germany

Banks have been seriously impacted by the financial crisis. The financial crisis causes an immense discussion about the soundness of the risk culture of the financial institutions. Corresponding to the results of diverse research studies, senior risk management observed a weak risk culture in the financial market as a trigger of the crisis. In accordance with the prevailing literature, I designed a risk culture model, which is used as the foundation for the autonomous development of a risk culture intensity index (R.C.I.I.). In the next step, I applied this index for the analysis of the risk culture of the 30 top financial institutions in Germany in a timeframe of four years from 2008 to 2011. The evaluation is based on a content analysis of the published financial statements of the organizations. The study examines whether a change in the risk culture can be considered or not. The result of the analysis is that there is a clear trend towards a more risk-aware and adequate risk culture in the financial market in Germany.