Managing conduct risk | Deloitte


Managing conduct risk

Addressing drivers, restoring trust

This paper identifies the common themes and drivers of misconduct in the financial services industry, with a view to helping firms identify and manage their conduct risk.

An introduction to misconduct

There has been no shortage of well-publicised and highly damaging misconduct scandals within the financial services industry over the past decade. Conduct is a lens into the culture of organisations, and conduct failings seem to be widespread across several jurisdictions, cut across financial services organisations and involve both the retail and wholesale sides of business. A large number of customers have claimed sizeable loss and there has been significant reputational and brand damage to firms. A raft of new regulatory initiatives, substantial fines and expensive remediation programmes have also ensued.

This report covers three subjects:

  • Drivers of misconduct
  • Restoring trust
  • A new approach through innovation
Managing conduct risk

Drivers of misconduct

Conduct is a current priority for both the financial services industry and its key regulators. Understanding what has driven poor conduct in the past can help firms design responses to restore trust and prevent problems emerging in the future. The report provides insight into 8 distinct drivers of conduct that can harm customers, employees, business reputation and the integrity of the market. The 8 drivers often overlap and, because each firm is structured differently, each driver will have differing levels of relevance.

Restoring trust

Industry, regulators and governments are designing ways to address the drivers of misconduct and raise standards within financial services firms, which in turn is helping to restore trust in the industry. Challenges, however, still remain. There are 8 responses for restoring trust in the firm and to support employees, customers and market integrity. Each of them will be thoroughly discussed in the report.

A new approach through innovation

It is well established that innovation is disrupting the way that financial services are being provided to consumeres. The focus is now being turned toward internal operations, with innovation being used to power better regulatory and compliance outcomes. The time is right to consider how new technologies can help manage conduct risk. The report elaborates on 8 innovative solutions for managing conduct risk.

More information?

For more information about this report please contact Eelco Schnezler via / +31882885220

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