FMR Advisory Round Table | Conduct Risk


FMR Advisory Round Table: Conduct Risk
Over the last few months the topic of conduct risk, behavioural risk and general management concern around how to demonstrate to the regulators that a given business is behaving correctly, has come up again and again.

FMR Advisory was established with the area of conduct risk as one of two core competencies and wanted to provide a forum where industry practitioners could meet and discuss this topic in a frank and open way. The FMR Advisory Round Table was held on Monday 28th July at the Capital Club with representation from the banking, legal and broker communities. A highly topical and interesting discussion highlighted a number of key themes.

As a regulator put it somewhat bluntly in November 2012, when looking at how to control conduct risk ...“The alternatives for regulators are difficult. Personally, I think the whole regulatory environment (Basel III included) is way too pre-occupied with numbers at the expense of the qualitative standards. The problem with qualitative standards is it requires greater skill levels at regulators (which they have to pay for) and is more politically difficult to enforce”

Themes that came up included:

  • The new regulatory focus and how both politicians and regulators are drilling into this area; whether called conduct risk, behavioural risk or simply as part of operational risk
  • Who within a firm should be driving and leading this change
  • What the change programme might look like
  • Managing the behaviour of trading, sales and support staff
  • To what extent is this outcome-based regulation and what the outcomes might look like

For the full report from the roundtable, see the attachment below.