Psychological Safety in Risk Management: Why Fearless Cultures Drive Better Leadership and Governance
Author: Camila Mateos Betancourt
Do you feel comfortable disagreeing with your peers at work? Calling out bad decisions? Is your workplace open to honest conversations and dissent? And when something’s not right, how long does it take you to speak up? Is failure punished or treated as a learning opportunity?
If you answered postively to most of these questions, chances are you feel psychologically safe at work. If not, there’s a bigger issue at play, one that isn’t just holding you back personally, but may be undermining your entire organization’s ability to grow, adapt, and succeed.
So, what exactly is psychological safety in risk management and why does it matter, especially in the context of risk management?
In this week’s episode of The International Risk Podcast, we sit down with Julien Haye, former Chief Risk Officer and author of The Risk Within, to unpack this critical but often overlooked concept. Together, we explore the hidden costs of fear and silence in the workplace, the warning signs of a psychologically unsafe culture, and how the role of Chief Risk Officer must evolve from compliance enforcer to cultural leader and strategic enabler. Julien also shares why learning, not blaming, must be at the core of organizational resilience, and why diversity and inclusion are non-negotiables in building psychologically safe, high-performing teams.
What is psychological safety and why does it matter?
Psychological safety, as defined in organizational theory, is the shared belief that it’s safe to take interpersonal risks. It means people feel secure enough to speak up with concerns, admit mistakes, or challenge the status quo, without fear of reprisal or ridicule.
“For me, psychological safety is a belief—driven by leadership—that people won’t be punished for asking questions, raising concerns, speaking up, challenging decisions, and actively contributing to the management of the organization.”
Julien Haye, Episode 237 of the International Risk Podcast
But in many workplaces, especially those with high stakes or rigid hierarchies, fear still rules. Julien Haye argues that this fear, often unspoken, is a hidden risk factor that too few risk functions are equipped to address.
In environments where problems are concealed, bad news is softened, and disagreement is discouraged, real risks remain invisible until it’s too late. Risk isn’t just about compliance or control, it’s about visibility, and that requires trust.
Fear and silence are risk amplifiers. When people delay flagging issues, when concerns are sugar-coated, when difficult conversations are avoided—real threats fester in the background. And risk officers who don’t have access to honest input cannot do their jobs effectively.
The challenge is cultural, not technical. Effective risk management isn’t just about frameworks—it’s about the conditions in which those frameworks are applied. That means fostering trust, embracing disagreement, and normalizing failure as part of learning.
From Enforcers to Enablers: The New Risk Leader
One of Julien’s most compelling arguments is that Chief Risk Officers must evolve. No longer passive enforcers of compliance, risk leaders must now become strategic partners embedded in the business, fluent in its operations, and trusted by its people.
He notes that if a risk team can’t challenge how budgets are allocated, or lacks the confidence to question strategic decisions, it’s a symptom of deeper dysfunction. Risk leaders need to be close enough to see the red flags and empowered enough to act on them.
But this cultural shift goes beyond the risk department. It requires inclusive leadership, the kind that values diverse voices and actively invites dissent. Julien points out that psychological safety isn’t universal. It varies across regions, teams, and even individuals. Leaders must recognize these nuances and create space for difference.
In inclusive organizations, disagreement isn’t dangerous—it’s productive. Failures are examined, not punished. Teams don’t fear mistakes; they learn from them. Whether it’s a tech company like SpaceX or a financial institution navigating complex regulation, the ability to “fail safely” is what enables innovation.
And in an increasingly nonlinear, interconnected, and fast-moving world, psychological safety is what gives organizations the agility to respond and recover. Risk isn’t linear anymore. So our cultures and leadership can’t be either.
Tune in to Episode 237 of The International Risk Podcast to hear how psychological safety shapes effective leadership, governance, and global risk resilience.
Psychological safety is just one part of a broader conversation about leadership, governance, and managing international risk. At The International Risk Podcast, we’ve explored related topics from leadership and strategic culture, to the importance of trust in organizational risk management. If you’re interested in how organizational dynamics shape resilience, we recommend giving those episodes a listen too.
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