Return on resilience: Value of culture in investment governance  

Two crews climb into identical boats, with identical kit, experience and preparation, but still, you find one crew stretches ahead to victory, while the other struggles to keep pace. How do you explain the gap when, at first glance, everything else looks the same? 

The difference can sometimes boil down to culture, the invisible force that turns collective effort into speed. 

For an asset owner, culture refers to the shared values, beliefs, behaviours, and practices that influence how assets are managed, decisions are made, and risks are approached within the organisation or investment environment. Culture can be expressed through judgement: how risk is weighed against return, how conflict is handled, and whether fiduciary duty is interpreted narrowly or with a long-term lens. It can also define how stewardship, accountability and learning are taken in practice. 

But while policies define decision limits and committees define processes, neither determines how people behave when faced with uncertainty, time pressure, or uncomfortable trade-offs, which is exactly the kind of environment asset owners face right now. 

Portfolios are becoming more complex, particularly as allocations to private markets are increasing. Reporting and investment decisions are often driven by short-termism, while the consequences of those decisions are often longer dated. At the same time, geopolitical fragmentation and technological change introduce risks that can be harder to model and quicker to materialise. 

Overlaying all of this is greater scrutiny. In an environment where investment decisions carry not just return implications, but increasingly significant business and reputational risks. 

Culture can determine whether organisations can respond with discipline and clarity, or whether they become reactive, slow, or overly dependent on process. It’s there at the foundation of all organisations but it’s rarely static – evolving as new voices are added and business priorities shift. 

At the same time, culture is hard to measure, harder still to manufacture, and while it’s distinct to each firm, there is value in looking at leading firms to see how they could benefit from effective leadership in developing an investment culture that could have a real influence on their investment outcomes.

In this episode, Anne Marie Schultz, US Investments Commercial Leader, Bernardo Serpa Pimentel, Senior Investment Consultant, and Michel Meert, European Consulting Leader for Endowments, Foundations and Family Offices, explore the idea of a “Return on Resilience.” 

Resilience is not just about endurance, it’s about adaptability, the capacity to respond to disruption with speed and confidence. Governance, when designed well, may be an effective enabler of that process. It may help create conditions for foresight, flexibility, and better alignment between long-term objectives and near-term action.

A strong investment governance culture at a well-run asset owner is visible in everyday behaviours, embedded operational processes and clear, measurable outcomes. It translates the organisation’s fiduciary purpose into consistent decisions: long term, risk aware, stewardship oriented and accountable. 

It shows up first in behaviour. Leadership consistently links decisions back to beneficiary outcomes, not short-term performance. Debate is active and conflicts are addressed and appropriately managed to ensure an agreeable resolution. Risk is discussed explicitly, including downside scenarios, liquidity implications and second-order effects.

There is a visible sense of ownership. Individuals take responsibility for decisions made within their remit, and escalation happens early when limits are approached or breached. Stewardship is treated as part of the investment toolkit, with voting and engagement used deliberately rather than passively.

Just as important are the processes that sustain these behaviours. The process for decision-making needs to be clear and documented, with well-understood boundaries between board, investment committee, executive team and external advisers. Delegation frameworks are not static; they are reviewed and adjusted as complexity increases.

Risk appetite is defined in practical terms, with clear tolerances and triggers that feed into portfolio monitoring. Manager selection goes beyond performance and incorporates governance, alignment and cultural fit. Incentives are structured over multiple years and linked to long-term outcomes.

There is also structure around decision-making itself. Techniques such as premortems, independent challenge and scenario analysis are used to reduce bias and test assumptions. When things go wrong, incidents are logged, analysed and used to help improve future decisions rather than quietly closed.

The final layer is evidence. In well-run organisations, culture leaves a paper trail. Board minutes should show real debate and all views are documented, staff engagement is high and turnover among key roles is low, and conflicts are disclosed and managed transparently.

When these elements consistently reinforce one another, we believe the asset owner is far more likely to be able to deliver durable, long term outcomes for beneficiaries and to withstand evolving operational, regulatory and reputational pressures.

A weak culture is not always visible until an organisation is under pressure, commonly faltering where formal frameworks meet human behaviour. Delegation is a frequent pressure point. Authority is transferred, but oversight does not necessarily evolve alongside it. Over time, this can erode internal understanding and reduce the ability to challenge external providers effectively.

Short-term thinking often presents itself as caution, but decisions solely focused on reducing near-term volatility can undermine long-term objectives, particularly when framed as risk management rather than risk avoidance. There are also more structural issues. Groupthink can emerge in boards and committees that lack diversity of perspective. Environmental, social and governance considerations can be treated as a reporting exercise rather than integrated into decision-making. While in private markets, governance gaps are often exposed through weak valuation discipline or limited transparency.

These blind spots may translate quickly into financial, regulatory and reputational costs and reduce the organisation’s ability to deliver long term performance. 

There are clear examples where investment governance failures have contributed to severe losses, as well as cases where strong governance has helped enable faster, more effective responses during periods of stress. The mechanism is straightforward: culture can influence how quickly issues are identified, how openly they are discussed, and how decisive action is taken.

The return on a strong governance culture is rarely visible in any single decision. It shows up in both avoided mistakes and lessons learnt when mistakes are made, faster responses in periods of stress and the confidence to act decisively when others hesitate.

It moves decision-making away from asset class silos toward a more integrated view of risk and return. That demands closer collaboration across teams, clearer articulation of overall objectives, and incentives that align with total portfolio outcomes rather than individual mandates.

But this approach cannot work without the right culture. From the beginning of their journey to adoption they need consider whether they understand their own culture, whether the one they have is fit for purpose, and whether it’s adaptable to changing market conditions – the hallmark of a successful total portfolio approach. 

Strong cultures are tested when conditions are hardest. In sport, that is often the difference between a crew that falters once and one that resets, regroups and is therefore closer to winning as a result. The same holds for asset owners and especially in this environment, culture is what shapes how decisions are made and ultimately whether organisations can respond with clarity, discipline and conviction when it matters most.

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