Online training
Conduct Risk Suite
The eight courses in the Conduct Risk Suite familiarize employees with the various areas of a firm’s culture and operations that present a conduct risk — the risk that customers and clients will suffer detriment as a result of the firm’s inappropriate business culture or inappropriate judgment in the execution of its business activities — and identify ways to mitigate this risk.
Geography Covered: Global | Duration: 30 minutes
Summary
In the wake of the financial crisis, regulators have targeted the behavioral aspects of firms and their business activities. The crisis revealed that a “check-the-box” compliance mind-set is not sufficient. In addition to following the rules, firms must also improve the intangible factors that affect risk in order to prevent future problems. To put it another way, firm culture and actions need to reflect a “should we” attitude rather than simply checking whether business decisions satisfy the “can we” question in order to minimize conduct risk.
Conduct risk is of growing concern to regulators and firms around the world; for example, the UK’s Financial Conduct Authority (FCA) has placed heavy emphasis on the need for firms to address conduct risk and offered guidance on how to do so. Despite its importance, conduct risk is hard to define, and there is no single definition that works for every firm. Essentially, conduct risk is the risk that a firm’s inappropriate business culture or inappropriate judgment in the execution of its business activities will cause detriment to its customers and clients.
Firms need to assess their vulnerability to conduct risk and proactively identify ways to respond to ethical dilemmas. By doing so, firms may prevent or mitigate the negative consequences of conduct risk failures, which include financial, legal and reputational damage to the firm; poor outcomes for customers and clients; and harm to the financial system as a whole. The Conduct Risk Suite of courses helps employees understand their personal responsibility to follow the firm’s policies, act ethically and make appropriate choices when carrying out the firm’s business activities.
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