Starling is pleased to offer the seventh edition in its annual Compendium series for 2024, a comprehensive report detailing the priorities and activities of bank regulators regarding firm culture and conduct risk management. This year's report features contributions from more than 30 senior banking industry executives, regulators and central bankers, international standard-setters, and academics. We also report on major developments, events, and analysis on culture & conduct risk management supervision across major global financial markets.

This book explores risk culture in banks following the financial crisis. It analyses the role of national and institutional risk culture, market competitiveness, organisational systems and institutional practices that led to a weakening of risk culture in financial institutions leading up to the financial crisis. It addresses how to assess and measure risk culture, and analyse the impact on performance and reputation. Finally it explores the impact of regulation and a variety of tools that can be applied from the board down to promote a healthy risk culture in the governance of financial institutions internal controls and risk culture in banks.

The Compendium is a publication of Starling Insights, a membership-based platform that is a resource for and by the community of leaders, experts, and practitioners working to bring new ideas and tools to the governance and supervision of cultural, behavioral, and other nonfinancial risks and performance outcomes. Readers will find discussion throughout this report, in articles by and interviews with dozens of contributors, among them: regulators, supervisors, central bankers and policymakers; standard setting bodies and industry associations; industry executives and peers from other sectors; prominent legal thinkers and practicing attorneys; as well as renowned scholars from various disciplines. We are humbled by their continued collective generosity and hope that our 2023 Compendium is found to be as valuable to readers as its predecessors.

Risk Culture is a practical volume devoted to the qualitative aspects of risk management, including those that should be firmly embedded in the corporate culture. Through descriptions, examples and case studies, the book analyzes weak and strong cultures and proposes a series of structural and behavioral actions to strengthen a company's culture.

This book is a critical examination of recently introduced individual accountability regimes that apply to the financial services industry in the UK (SMCR) and Australia (BEAR and the forthcoming FAR), together with a forthcoming new individual accountability regime ( in particular, SEAR) in Ireland. It provides a framework for analysing whether these regimes will achieve behavioural change in the financial services industry. This book argues that, whilst sanctioning individuals to deter future misconduct is an important part of any successful regulatory strategy, the focus should be on ensuring that individuals in the financial services industry internalise the norms of behaviour expected under the new regimes. In this regard, the analysis in this book is informed by criminological theory, regulatory theory and behavioural science. The work also argues for a “trajectory towards professionalisation” of financial services, and banking in particular, as an important means of positively influencing industry-wide norms of behaviour, which have a key influence on firms’ and individuals’ behaviours.

The paper analyzes the role of financial regulation in facilitating the development of organizational norms to enhance risk culture in banking institutions. Specifically, it examines the regulatory responses and industry-led initiatives taken since the financial crisis of 2007-08 to address weaknesses in bank risk culture. The paper suggests that shortcomings in risk culture -- particularly as understood through the lens of human agency theory -- in large financial institutions are the result of collective agency problems. The paper argues that regulation has a role to play in addressing collective agency problems but that regulators should be selective in what tools they use to enhance risk culture in banks with consideration given to the regulation of remuneration and trusted financial products. It further suggests that to address collective agency problems in large financial institutions policymakers should consider the utility of senior managers' liability regime to incentivize senior officers and directors to be more proactive and aware of misconduct and other behavior that results in agency costs for the firm and society. The paper concludes, however, that financial institutions themselves are best placed to channel the collective actions of individuals to improve governance and operations in a way that benefits overall firm performance and which mitigates socially costly behavior.