An Overview of Conduct Risk
How Does Conduct Risk Manifest and What Are Its Root Causes?
What Are the Driving Forces of and Who Owns Conduct Risk?
Scope and Ownership within the Business
Conduct Risk in Financial Services: Lessons from the Hospitality and Leisure Industry
Ethical Culture: What, Why and How?
Language and Conduct Risk: Limited Language – Big Blind Spots
An Anthropological Perspective on Conduct Risk
Identifying and Measuring Conduct Risk
Risk Appetite Setting and Modelling Conduct Risk
The Effect of Conduct Risk Losses on Reputation
Bringing the Customer Back to the Foreground: The End of Conduct Risk?
Managing Conduct Risk
Closing Comments on the Future of Conduct Risk
Some firms’ cultures, processes and products have been designed to enable them to profit from consumer errors and to exploit their superior access to, or understanding of, information on financial products and services. This can mean that the consumer may not be getting what they need and that firms do not act in the consumers’ best interests, eg, where incentives are designed to promote the short-term interests of the firms rather than the long-term interests of the consumer.
Financial Conduct Authority “Conduct Risk Outlook 2013”
In this chapter we shall discuss:
- the business model, looking at both the impact of the business model on conduct risk management and the impact conduct risk can have on the business model;
- reducing complexity and introducing conduct risk management into the business model;
- ownership of conduct risk within the business, focusing on responsibilities and accountabilities.
Financial Services Authority (2011) defined conduct risk as “the risk that firm behaviour will result in poor outcomes for customers”. Conduct risk evolved in many ways from the FSA work on treating customers fairly (TCF). Following the financial crisis i