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Conduct risk MI in an era of changing supervisory scrutiny
Since the financial crisis, the supervision of conduct risk has been gradually but radically transformed. This has led to increased senior management accountability and more-wide ranging supervisory expectations. Understanding the change in supervisory approach and expectation is essential to the design and operation of firms’ conduct risk management information (MI).
At a glance
This report is aimed at Board Members, Senior Managers and Executives subject to regulatory accountability regimes. In short it:
- Summarises how conduct supervision has evolved in the last few years, particularly its focus on customer outcomes and potential harm, and firms’ business models and culture.
- Sets out how, spurred by this changing approach, supervisors are likely, in practice, to probe and challenge on conduct risk.
- Identifies 5 supervisory priorities that need to be captured in firms’ MI.
- Explores what types of MI firms need to demonstrate that their Board and Senior Managers are monitoring these conduct risks and outcomes in the way, and to the standard, that their supervisors expect.
A snapshot of each the five supervisory priorities is available on the tabs below.
We set out some examples of the lines of enquiry supervisors may pursue during their interactions with firms. These are accompanied by examples of MI that the Board and Senior Managers could use to assure themselves that their firm is identifying and managing these risks appropriately, and monitor the customer outcomes being delivered.
More information and examples can be found in our full report which is available to download above.