Governance, risk & culture

Paradigm Risk launches riskbriefing, a new series of papers on topical issues in risk. The initial paper looks at governance, risk & culture in financial services firms:

Getting to grips with risk governance & risk culture

RESEARCH IN RISK

RISKBRIEFING SPRING 2012

Our Spring 2012 riskbriefing looks at how the FSA is reacting to calls for enhanced governance and improvements to regulated firms' risk cultures. In a section attracted little comment, the FSA's review of RBS tipped its hand on the progress made (or lack of it) in these vital areas. We review their developments, prospects for enhancing risk culture and propose an 8-point plan for improving a firm's governance and risk culture.

The riskbriefing and executive summary can be downloaded (see adjacent) and can be viewed online, as follows:

Highlights (executive report)

Summary / change plans (by section)

Introduction

Governance going wrong

A great leap forward?

Understanding and using 'risk culture'
Can risk culture be measured?

A programme for preemptive enhancement of governance and culture

1. Profile the firm's risk system
2. Form a view of the firm's risk culture
3. Focus on framework and system issues at board level
4. Distinguish analytically and informally between risk and uncertainty
5. Promote internal candour
6. Develop a programme for enhancing the firm's risk competence
7. Enhance the firm's leadership and leaders' interpersonal skills
8. Review operation of the firm's policies for unintended consequences

Summary . . . and a further note of caution