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Restoring trust in financial services

Three levers for conduct risk management

Increasing trust in the financial system and in financial institutions has been a priority for governments and regulators for the past decade, signalled by the growing interest in the fair treatment of customers. The global pandemic has only served to amplify the urgency of this concern throughout global markets and here in Canada.

However, financial institutions will need to do more than address individual instances of bad behaviour or undertake reviews of their approaches to minimize conduct risk; firms will need a deep understanding of their own organization’s culture to design robust and dynamic programs that drive good conduct outcomes.

Leveraging the three levers - culture, conduct framework, and conduct analytics - will help financial institutions strengthen conduct risk management and accountability across all their business activities, and ultimately rebuild and restore trust.

Download the report and contact Jay McMahan, National Conduct & Culture Leader for more insights and a deeper discussion.

The three levers of conduct risk management:

Culture, Financial institutions will need to examine their culture, including the habitual behaviours and mind-sets that shape attitudes, decisions, and behaviours within their organizations though surveys or deep dives on risk culture. This will allow them to better understand their vulnerabilities, which in turn can be used to evolve their culture in order to promote the right behaviours, ensure strong risk management and accountability, and improve monitoring across all business activities. Conduct framework, Firms will need to design and implement conduct risk frameworks to improve risk management discipline and accountability on supervision and surveillance activities. As well, they will need to build and implement processes and controls to meet regulatory expectations on fair outcomes for customers and protecting the integrity of the marketplace against abusive and manipulative practices. Conduct analytics leveraging data, Firms will need to consider how they can leverage the use of data and analytics to proactively monitor and enhance their culture, as well as identify early warnings of misconduct. This can involve connecting the  dots across different data silos; designing KPIs to link product sales or  customer feedback to individual performance, compliance, and HR data;  and transforming low added value controls used to detect misconduct  into more meaningful and actionable reporting for enhanced oversight by  management and the board.
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