A recent outcome of the Thomson Reuters research shows an increasing number of bank professionals are worried about risks of personal liability, when involved in taking strategic business decisions for their organizations.
According to a 2017 study of compliance and risk practitioners employed in the financial sector worldwide, the lack of consistency in culture and conduct risk definitions appear to be main cause for key decision-makers in the industry to record this rate of high concern.
The well-documented Thomson Reuters research report indicated, for the first time, a direct link between behaviour patterns of bank professionals influenced by factors such as organization culture, conduct as well as regulatory procedures implemented, in the garb of fostering change and risk mitigation.
The study covered banks, brokerage and asset management firms and insurance companies worldwide totalling to a sample size of 750 organizations located across Africa, the Americas, Asia, Australia, Europe and the Middle East.
The result showed that nearly 1/3rd of the respondents said that their firms have declined potentially rewarding business opportunities, ventures and proposals due to cultural/conduct risks faced by the administrators or bank professional handling the project, who saw the risks leading to personal liabilities.
This percentage, added to the global figure of 37% of the respondents (from internationally high-rated financial institutions) conceding that they take culture and conduct risk factors into consideration when analysing business strategy decisions, moved the total up to 77%, a major chunk of the sample size, indeed.
“Our annual survey provides insight into industry thinking and emerging best practices, as well as regulatory expectations,” co-author Stacey English, head of Regulatory Intelligence, Thomson Reuters, said, highlighting the study. “Neither culture nor conduct risk are new concepts but this year’s survey emphasizes how both remain at the top of firms’ and regulator priorities, directly impacting strategy as they face greater prospects of personal liability.”, she added.
Most executives agreed that the disparity in this behaviour area is determined by the lack of consistent definition for culture and conduct risk.
The top-listed indicators that emerged in the survey
- Culture, ethics and integrity
- Corporate governance and top-management tone of voice
- Conflict of interest
- Regulatory environments, developing metrics and MIS and cultivating an appropriate culture – these posed challenges and risks at Board level
- Divergent approaches to measurement – compliance monitoring, internal audits, staff opinion surveys and complaints analysis, among others.