75% of clients now recognise conduct risk as a risk to their organisation.

April 22, 2016

We asked our customers how important it is to recognise conduct risk and what challenges they face in managing and mitigating the impacts of conduct risk.

The cost of managing conduct is now seen as significant and often has financial implications. During 2010-14 the 16 top global banks paid an estimated £161 billion (AUD 298 billion) as a result of poor conduct in both compensation and fines*. While fines and compensation represent a direct financial cost, the impact that poor conduct can have on an organisation's brand reputation can be severe and have long lasting financial repercussions. 

Similar to the risk impacts associated with third parties, organisations can no longer distance themselves from incidents or events by singling out individual employees as the source of the problem - organisations are being held accountable for the actions and behaviours of employees. In recent times we have seen organisations consider conduct risk when they review their strategy, product development, and even distribution mechanisms in an attempt to ensure positive customer outcomes. 

Regulators both in Australia and around the world are now focusing on the ways that organisations define and monitor conduct. Conduct risk is now being seen as part and parcel of the DNA of an organisation and cannot be separated from an organisation's corporate culture.


To find out more about how SAI Global clients view conduct risk in their organisations, see our Conduct Risk Infographic. If you would like more information about conduct risk, you can listen to our recording of the Conduct Risk - More than just monitoring behaviour webinar and view the presentation slides. 

Sources:
*London School of Economics, 2010-2014 
All other sources - SAI Global Conduct Risk Infographic, 2016