Risk managers from around the world told us that while the concept is important, there’s considerable work to do for banks to turn the concept into the reality of a strong, well understood and well managed risk culture.
In particular, the survey findings and accompanying article have highlighted the inconsistencies between banks in how they actually measure risk culture. The measurements they typically use are not quantitative, so it is hard to demonstrate how well risk culture is really being implemented. There is also some dispute to where the accountability for risk culture lies within a company, with some banks not requiring their business line to take ownership of it. Risk is fundamental to banks and therefore risk culture needs to be embedded and owned in both corporate functions and business lines. With reward mechanisms to promote good risk culture not yet mature, and good practice not yet institutionalised, there is little incentive for employees to exhibit all the required behaviours.
Given the annual certification that is required as part of the SM&CR regime, there is more need than ever for banks to demonstrate that their staff are “fit and proper”. Being able to demonstrate the right risk culture across a firm will go a long way towards achieving this fitness and propriety check.
Read the full article: Risk Culture: banks fall short in eyes of staff.
You can also download our earlier white paper: Risk Culture: six steps to success