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
A key step in managing conduct risk and meeting regulatory expectations is understanding where conduct risk exposure lies in a business and what the extent of that exposure is. Without an adequate understanding of where conduct exposure lies it is impossible to appropriately manage and monitor the risk. This involves both identifying and measuring conduct risk, and it is these concepts that are explored in this chapter, beginning with an examination of why it is important to effectively identify and measure conduct risk.
The second section in this chapter discusses how a firm might go about identifying conduct risk. We shall look at the key elements involved in conduct risk identification, and stress the importance of looking at all the elements to ensure the specific nature of the conduct risk is understood and can therefore be addressed.
The third section focuses on measuring conduct risk exposure. We highlight the importance of measuring conduct risk to ensure an accurate picture of the conduct risk exposure of a firm is created. An inaccurate measure of conduct risk exposure can lead to inappropriate or disproportionate conduct risk management.