Thomson Reuters Survey Shows More Financial Services Firms Defining Conduct Risk, But Many Have a Long Way to Go in Formally Putting Theory to Practice
(Thomson Reuters ONE) -
G-SIFIs lead the pack in defining and
implementing firm-wide formal conduct risk policies
LONDON/NEW YORK, March 30, 2016 - Thomson Reuters today announced the findings
of a new study revealing that while many financial services firms are making
strides in defining conduct risk, there's little tangible progress in their
efforts to formally approach addressing it within their organization.
Meanwhile, compared with last year, Globally Systemically Important Financial
Institutions (G-SIFIs) have made the biggest strides in both defining conduct
risk and implementing formal conduct risk policies within their organizations.
The Thomson Reuters Conduct Risk Report 2015/16 follows-up on last year's study
by looking at what practical actions firms have taken, as well as what overall
change and progress has been made since.
Thomson Reuters surveyed more than 260 compliance and risk practitioners from
financial services firms -- including banks, insurers and fund managers --
across the Americas, Europe, Australasia, Asia, the Middle East and Africa to
gain insight into how the industry is defining and responding to conduct risk.
Key findings from the report include:
* 64 percent of respondents still do not have a separate working definition of
"conduct risk" -- a modest decrease from 2014 when 81 percent of respondents
reported not having firm-specific definitions. Amongst G-SIFIs, only 43
percent have not defined conduct risk, a significant decrease from 2014 when
74 percent had no definition for conduct risk.
* 32 percent report that their firm's approach to conduct risk is in the
development phase, 37 percent state that it is implemented but requires
additional work and resources. G-SIFIs have done the most, with 41 percent
saying their approach is implemented but still needs additional work and
resources.
* 70 percent of respondents said the regulatory focus on conduct risk would
increase the personal liability of senior managers, with 80 percent of G-
SIFIs expressing the same view. This is a slight change from the previous
year, which was 67 percent and 75 percent, respectively.
* 52 percent reported an increase in board-level focus on conduct risk in the
past 12 months, coinciding with 51 percent of firms having a senior manager
responsible for conduct risk. And 63 percent of firms expect an increase in
the cost of time and resources that will be devoted to conduct risk in 2016.
* Despite the lack of a definition for conduct risk, there appears to be
international agreement about the main components. "Culture, ethics, and
integrity," and "corporate governance and tone from the top," as well as
"conflicts of interest," are all common components.
"Conduct risk is no longer a new concept and it is here to stay so financial
services firms are seeing the importance of implementing a formalized approach
to conduct risk inside their organization - that starts with the creation of a
working definition of conduct risk," said Stacey English, report co-author and
head of Regulatory Intelligence at Thomson Reuters. "G-SIFIs are leading the
pack when it comes to defining conduct risk and implementing formalized conduct
risk policies. We expect smaller firms to follow suit."
Some of the practical ramifications of the increased regulatory expectations and
scrutiny on conduct risk are discussed in this interview
https://youtu.be/808S2tjihnU between Susannah Hammond, report co-author and
senior regulatory intelligence expert at Thomson Reuters, and Alexander Robson,
managing editor, Regulatory Intelligence, Thomson Reuters in London.
For a copy of the 3(rd) Annual Thomson Reuters Conduct Risk Report 2015/16,
please click here.
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CONTACTS
Mark D. Harrop
Public Relations Manager, Financial & Risk
Office +1 646 223 7803
Mobile +1 347 803 5575
Mark.harrop(at)thomsonreuters.com
Ilya Hemlin
Public Relations Specialist, Financial & Risk
Office +1 646 223 5532
Mobile +1 347 913 2599
Ilya.hemlin(at)thomsonreuters.com
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Datum: 30.03.2016 - 17:15 Uhr
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