Board Matters International. Culture, Conduct and Regulatory Compliance
Compliance is Central and Risk Management is Key.
Culture, Conduct and Regulatory Compliance
A good culture seeks to do the right thing and put the customer first. Good culture applies best-in-class governance; therefore, having a comprehensive and realistic view of business risks is an important part of regulatory compliance.
So, with considerable experience in matters of Culture, Conduct and Regulatory Compliance, working in partnership with you, giving access to our wider skills and experience, we can enhance your assurance functions; whilst keeping you in control at all stages and support you in documenting risks to your business, including identifying mitigating actions to manage and reduce those risks.
It Starts With Culture
Culture and conduct are the main drivers of good customer outcomes and sustainable business success. A good culture seeks to do the right thing, put the customer first and applies best-in-class governance. To do this, you need to have an aligned culture with high quality regulatory compliance frameworks in place. Setting the tone at the top is key.
Irrespective of business sector, a quality culture breeds appropriate conduct; if culture is the set of beliefs that define a firm, conduct is the measurable and observable behaviours that manifest themselves from that set of beliefs. According to a 2014 PwC report, a quality culture has a greater correlation with sustainable high performance than strategy, operating model or product coverage.
Further, in a 2018 discussion paper, the UK Financial Conduct Authority noted that for markets to work and firms to be successful, it is critical that they are seen as trustworthy. Yet, in the already cited PwC report, 59% of Financial Service CEOs said that a lack of trust in their businesses is a threat to growth.
Good Culture is hard to implement
The tempting thing is to make this an exclusively financial services oriented discussion. However, the same principles apply in other sectors for which it can be observed that culture often does not get appropriately set and organisations do not learn lessons from the past. For example, when the Space Shuttle, Columbia, was destroyed in 2003, it was NASA’s second loss of a Shuttle following on from the 1986 loss of the Shuttle, Challenger; the Columbia Accident Investigation Board report noted that;
“despite all the post-Challenger changes at NASA and the agencyʼs notable achievements since, the causes of the institutional failure responsible for Challenger have not been fixed. Second, the Board strongly believes that if these persistent, systemic flaws are not resolved, the scene is set for another accident. “
Columbia Accident Investigation Board Report, August 2003
In Chapter 5.2 of the report, entitled “the NASA Human Space Flight Culture”, the Investigation Board comment on organisational culture with a close observer of NASA noting;
“Cultural norms tend to be fairly resilient …The norms bounce back into shape after being stretched or
Chapter 5.2, Columbia Accident Investigation Board Report, August 2003
bent. Beliefs held in common throughout the organization resist alteration.”
It is clear that organisations of every type have difficulty with refreshing culture. So what happens when your culture is no longer fit for purpose? If the culture of your firm is not fit, then neither will your conduct be.
Conduct, Culture, Regulation and Risk
Wherever you are in the world, whatever sector you may be in, the proper focus on culture and conduct is driving the regulatory agenda. Closely linked to this is the global drive for greater accountability. More than half of the Company Board we have evaluated demonstrate a tendency to avoid accountability; quite alarming if you think about it. Regulators are only too aware of this and this informs their approach.
For example, operational resilience is an area where the regulator is currently focusing some attention. The regulator’s objective is to ensure firms can be more operationally resilient. The ongoing availability of important business services to customers protects them from harm should these services fail. More resilient firms promote more effective competition and the ongoing availability of important business services reduces the risk of harm to market integrity.
Is your approach to the Regulatory agenda optimised for best outcome?
How does your risk strategy, inventory, policy, tools and function measure to best practice? Further, does it actively identify, assess, decide and mitigate the risks your organisation faces?
Additionally, how do the governance arrangements measure up and will it meet the increasing expectation of regulators? Finally, how have you assessed this?
Doing the right thing and complying with obligations is a winning formula
As Directors, you are responsible for successfully stewarding your company, ensuring it does the right thing, manages risks well and complies with obligations.
With so much to do, we have found that firms benefit from engaging professionals who can cast a dispassionate eye over your governance arrangements, risk and compliance frameworks.
BENEFITS OF RISK, GOVERNANCE, REGULATORY & COMPLIANCE REVIEW
- A means to obtain unbiased perspective
- With good advisory partners, practical insight and experience will be harvested
- Benchmarking your approach against industry best practice
- Keeps you up to date with current regulatory developments
- Provides extra bandwidth to a stretched Executive Team
- Provides comfort and validation to Non Executive Directors
- Improves relationship with regulators
- Demonstrates due care to the regulators
WHY BOARD MATTERS INTERNATIONAL?
We have worked at the highest levels of regulated industry and financial services; therefore, understand the complexity and the discipline required to be effective and to be compliant with regulatory requirements. So we have managed competing priorities and different stakeholders effectively to achieve success at the top table and can provide independent and objective insights to our clients; therefore, we support you at each step and offer practical and pragmatic solutions. As experienced Directors who serve boards, so our advisory is bespoke, tailored and delivered by those with real experience.
Similarly, as practitioners, we ground everything in real experience and advise you as such.
We fully understand and are up to date with the regulatory change agenda and current areas of regulatory focus. Therefore, we keep our clients up to date with these changes and the likely impacts for their business.
BOARD MATTERS INTERNATIONAL CAPABILITY
Among our key services we offer include;
- Through a comprehensive and realistic view of business risks is an important part of regulatory compliance; as a result, we support our clients in documenting the risks to their business and in identifying mitigating actions to manage and reduce those risks.
- We help achieve improved conduct, cultural and governance outcomes and can assist in the design and implementation of an appropriate accountability framework, for example, SMCR and SEAR.
- Therefore, we provide tailored support for executives going through the senior manager approval process.
- Also, we offer practical advice on Statements of Responsibilities, Fit and Proper processes, Responsibilities Maps, Conduct Rules programmes and can assist our clients in preparing for regulatory interviews.
- In addition, we undertake operational resilience impact assessments through a benchmark evaluation; outlining gaps in clients’ operational resilience frameworks and working with clients to optimise continuity of important business services. This includes Cyber risk assessments and breach response plans.
Above all, Board Matters International will get to the point and be honest. Selling a non-required service is not what we do.
For a confidential discussion of your requirements, contact us today.
