The Great Financial Crisis (GFC) and its aftermath renewed our focus on banking culture and conduct. Banks have endeavored to implement various changes to improve their conduct and culture. Still, a range of global scandals have come to light, raising fundamental concerns about the quality of business-line controls and risk accountability. It has also led to new thinking about operational risk and, in particular, conduct risk. This course discusses how cultural issues at banks could have costly and far-reaching effects on the industry and the wider economy, what banks are doing to measure and manage culture and conduct risk particularly against the backdrop of continuing pressures on business models from Basel III measures and the low interest rate environment, The course will also compare and contrast different regulators’ approaches to supervising culture and conduct at banks, and will include an overview of the available diagnostic tools used to address questions of culture and conduct.
The course will place culture and conduct issues squarely within examiners’ review of the quality of a bank’s overall risk management. Essential components of a risk management evaluation will be covered, along with examples of good and bad risk management at actual banks.
By the end of the course, participants should understand the broad concept of culture and conduct risk, diagnostic tools used to address questions of culture and conduct, and the importance of cooperation and knowledge-sharing among regulators that could lead an international and industry-wide culture and conduct risk management and supervision framework may be warranted. The participants should also be able to improve their ability in identifying “toxic” culture that produces employee misconduct.
This course is intended for participants who are engaged in financial sector supervision or regulation. Participants should have at least three years of experience in banking or broader financial sector supervisory activities, such as on-site examination, off-site monitoring, or regulatory policy development. By invitation of SEACEN members, officials of stand-alone financial sector regulatory authorities and deposit insurance funds are also encouraged to attend.