Effortless Conduct Dashboard
Welcome to the 3rd blog 2018 from my new book “Operational Risk Management Best Practices for the Financial Services Industry, Wiley Finance Series, 2018. This is an extract of Chapter 15 on Risk Reporting, pp 163-164:
“REPORTING ON CONDUCT
Conduct and behavior have attracted considerable regulatory attention since the financial crisis and firms are now taking great care to monitor conduct in their businesses. Figure 15.3 presents the common themes and metrics reported in the context of a conduct-monitoring program.
FIGURE 15.3 Themes and metrics for conduct risk reporting
■ CRO on the board
■ Risk specialist in risk committee
■ Frequency of risk committee meetings
Supervisory skills and training
- Compliance to training and mandatory training
■ Training, guidance and policy for managers and team leaders
■ Face-to-face awareness sessions
■ Behaviours against prior set objectives
■ # information security breaches
■ # disciplinary cases
■ # policy violations
Transparency and timeliness
■ # self reported issues
■ Occurrence date vs. reporting date of loss events
■ Overdue risk management actions against plan
■ Overdue audit recommendations against plan
■ Client sophistication/information asymmetry
■ Pricing structure vs. cost and quality
■ Complaints handling and customer satisfaction
■ Product cancellations
Onboarding process and screening
■ Employees and contractors
■ Third-party onboarding
■ Client onboarding
A case study below presents an abbreviated example of metrics used to monitor conduct in financial firms, from a regulatory and operational risk perspective. Culture is measurable as long as it is defined by behaviors, measured and tracked by proxies. Methods to influence and change risk culture are addressed in Chapter 12. Culture reporting is specific to the culture of each firm and exceeds the scope of risk reporting.
CASE STUDY: EFFORTLESS CONDUCT DASHBOARD
Table 15.1 is an abbreviated example of a real conduct dashboard (thresholds and scores are fictitious). It is a sanitized version of a reporting dashboard we created for a bank that needed to start reporting quickly on conduct.
Using metrics already available in the firm is the fastest and easiest way to put together a reporting set. This is what we did:
out of all possible metrics relevant to track conduct, we ask the firm to select the ones that were both relevant for their business model and already available. This led to a dashboard quite seamless to create with the additional significant advantage of displaying past data and trends over the last four quarters.
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