In the past, risk management has largely been tick box or framework driven. Managers have measured employees against a list of ‘must dos’ and ‘must don’ts’ in a 3 or 4 tiered checking process. So much of the focus has been on what to do, leaving people unclear on how or why.

At its extreme, we have seen employees that are so confined by compliance guidelines, scripts and what then can and cannot say that they are unable to fulfil on the principles behind the compliance processes.

This drives a transactional approach and triggers a number of Behavioural Economics phenomena that can blur the consumer’s decision making process.

In many ways it exacerbates the risk that “firm behaviour will result in poor outcomes for customers” (The FSA’s 2011 definition of conduct risk).

However, the FCA is now encouraging firms to take a cultural approach to managing this risk. In their 2014 Risk Outlook, FCA Chairman, John Griffith-Jones wrote;

“Embedding cultural change in a firm that acts in the interest of consumers is the essential next step if firms are going to regain trust from their consumers. …. every positive step towards embedding a culture which places consumer interests at the heart of the business will ensure the protection of consumers, market integrity and effective competition…. Firms and market participants need to take responsibility in maintaining the integrity of our markets through their own actions.”

The FCA has recognised that conduct and culture, behaviours and values, people and their environment, are intimately connected when it comes to protecting consumers, markets and each individual firm. They are enforcing a cultural approach to risk, which is principle led and requires a positive approach to risk management.

Rather than continually ‘checking up’ on employees, now firms must invest in their people to embed a values system that will drive the right behaviours. Risk managers must now create an environment where behaving in the wrong way isn’t a risk that may be spotted by compliance, but is instead completely unnatural for each individual and their peers.

The right behaviours must be ‘social normed’ throughout the organisation not enforced with a check box system and a framework.  Cultural change is essentially people change; cultural change means investing in and developing your people to enable them to deliver an outstanding customer experience.

Elite organisations focus on their cultural conduct and their customer experience in the knowledge that these elements are the key to delivering a great customer outcome. They realise that great customer outcomes are the surest way to commercial success.

The Bigrock e4e approach to conduct risk is to create a positive environment where risk is minimised through shared customer centric values and people development. To receive your copy of our e4e brochure outlining this approach please email