Organizational preparedness for extreme events: mindfulness and the measurement, management and avoidance of risk in the financial sector

This research examines organizational preparedness for extreme events in the financial sector through three orientations toward risk: measurement, management, and avoidance, with organizational mindfulness as an underlying influence across these orientations. Using survey data from 315 professionals in risk-related roles in the Spanish financial sector, the study applies Structural Equation Modeling to analyze how these factors shape perceptions of organizational preparedness for potential extreme events. The results indicate that quantitative risk measurement approaches and organizational tools for preparation, response, and recovery are positively associated with perceived preparedness. By contrast, perceiving the financial system as complex and tightly coupled is negatively related to preparedness, although the relationship is only marginally significant. Organizational mindfulness is found to exert a strong indirect influence by strengthening risk measurement and management practices while mitigating perceptions of systemic complexity and tight coupling. These findings suggest that preparedness for extreme events is shaped by analytical risk models, organizational tools and routines, perceptions of systemic constraints, and an organizational culture of attentiveness. The study highlights the importance of understanding how organizations develop preparedness in sectors exposed to low-probability, high-impact events of both financial and non-financial nature.