Culture risk is the risk that strategy and culture will be incompatible, leading to what outcome?

• A. Resistance to change
• B. Excess inventory
• C. Mergers and acquisitions complexity
• D. Legal compliance issues

Answer: (A)

Culture risk comes from a clash between how people behave and think in the organization and the new strategy being pushed forward. When the strategy requires new ways of working, mindsets, or decision-making, but the current culture rewards the old habits, people often resist the change. That resistance shows up as hesitation, pushback, or not adopting the new processes, which can slow, derail, or ruin the implementation of the strategy. For example, moving to a more collaborative, fast-paced approach can fail in a highly siloed, risk-averse culture because employees prefer the familiar ways. This resistance is the direct result of misalignment between strategy and culture. In contrast, other issues like excess inventory, M&A complexity, or legal compliance arise from different types of risk and aren’t the immediate outcome of culture-strategy incompatibility.