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
We are being dishonest by definition and are at risk of damaging our reputation in the market and with the regulators.
The above statement is a quote within a quote. It refers to a submission made by a bank representative to the UK Financial Conduct Authority (FCA) with respect to the London Interbank Offer Rate rigging scandal of 2014, and was quoted in a speech by Tracey McDermott, the Director of Enforcement and Financial Crime at the Financial Conduct Authority (McDermott 2014). Many would say that it is obvious that poor conduct in financial dealings damages reputation, but there is very little quantitative evidence in support of that view. The main reason for this is that a way of objectively measuring reputation was only developed in the wake of the financial crisis of 2008. The aim of this chapter is to provide that evidence. When we consider what losses due to bad conduct actually are, we can write down factors such as mis-selling, dealing with complaints, paying for legal disputes and dealing with the consequences of giving poor advice. Continuing the theme of what is obvious, we can offer two simple examples. First, if a customer is dissatisfied with a service, they ca