J Haye's Weekly Digest, October 28th 2024
Julien Haye
Transforming Risk into Opportunity—Strategic Risk Leader | Advisor | Speaker | Author | Chair, NED, & Trustee
Hello everyone,
Happy Monday! I hope you had a wonderful weekend.
Welcome to our new readers! I hope you find our newsletter helpful. If you have any questions or topics you want us to cover, please let me know.
This week,
Please note that six episodes of RiskMasters are now CPD accredited and will count toward your continuous learning.
Diversity and Inclusion as a Business Risk in Financial Services under FCA CP23/20
How does your organisation address diversity and inclusion risks?
As regulatory demands increase, diversity and inclusion have become crucial for business innovation and product development.
The FCA’s CP23/20 emphasises the need for inclusive governance frameworks that reflect the diversity of the population.
Do you face any of these challenges?
(1) Difficulty fostering a diverse leadership team?
(2) Unclear definitions or accountability in governance?
(3) Inadequate understanding of your customer base’s makeup?
If so, it’s time to review your governance and ensure your strategies align with both regulatory standards and market demands.
Read more in our latest article.
The FCA’s Culture and Non-Financial Misconduct Survey establishes a baseline for monitoring non-financial misconduct across the financial services sector, with no immediate best practice recommendations but a call for firms to improve governance, culture, and transparency in handling such incidents. We have also enhanced our article on Non-Financial Misconduct, embedding the key insights from the survey.
Here is a summary of the FCA’s key findings from their Culture and Non-Financial Misconduct Survey:
(1) Incident Trends: Reported non-financial misconduct incidents have risen from 2021 to 2023. Bullying/harassment (26%) and discrimination (23%) were the most frequently reported, with significant reports in the “other” category, which included behaviours like intoxication and policy breaches.
(2) Detection Methods: Firms primarily detected incidents via formal grievance procedures and whistleblowing. Some sectors, notably wholesale banks, also used surveillance tools. Detection varied by firm size, with smaller firms reporting fewer incidents.
(3) Actions Taken: Only 43% of incidents led to disciplinary or “other” actions, with violence and intimidation cases more often resulting in disciplinary action than discrimination cases. Settlement agreements and confidentiality agreements fell over the period, especially in wholesale banks. Remuneration adjustments for misconduct were rare, typically impacting unvested variable pay.
(4) Sector Differences: Sectoral and firm-size differences were evident, with wholesale banks having higher incident rates and disciplinary action frequency varying across sectors. Wholesale banks had the highest non-upheld incidents, with only 55% of incidents resulting in disciplinary measures.
(5) Policy Gaps: Not all firms had comprehensive policies in place, such as whistleblowing and disciplinary policies. Governance gaps were noted, as 33% of firms lacked formal structures for handling misconduct outcomes, and many boards lacked management information on non-financial misconduct.
(6) Regulatory References and Remuneration: Many firms included non-financial misconduct in regulatory references, and the use of confidentiality agreements, particularly for discrimination cases, declined across the surveyed years. Remuneration adjustments mainly targeted unvested variable pay.
(7) Expectations and Next Steps: The FCA urges firms to benchmark against peers, enhance their culture, and maintain whistleblowing policies. The FCA will use survey insights in supervisory work, focusing on outliers, while industry improvements are encouraged through trade associations.
Read more in the FCA article.
RiskMasters Podcast (CPD ACCREDITED!)
“In sustainability, start at the top, or risk being sidelined.” – Aurore Lecanon
In this CPD accredited episode of RiskMasters, host Julien Haye sits down with Aurore Lecanon, a seasoned Chief Risk Officer in the insurance industry, to explore the intersection of sustainability and risk management. Aurore shares her unique career journey from her beginnings in the insurance sector to becoming a leader in risk management. She delves into the challenges and opportunities of integrating sustainability into corporate strategy, offering insights into the evolving nature of risk leadership and the critical role of culture, governance, and strategic alignment in achieving sustainable outcomes.
Stay tune for our upcoming interview with the fantastic Saadia Mujeeb on RiskMasters, the CPD risk management podcast.
Listen to it here: https://www.aevitium.com/post/integrating-sustainability-and-risk-insights-from-aurore-lecanon-on-leadership-strategy-and-indus
Discover the Previous Interviews on RiskMasters
EP7 Navigating Geopolitical Risks and Embracing Diversity: Insights from Anna Rosenberg (CPD Accredited)
EP6 - Embracing Resilience, Authenticity, and Strategic Risk: Insights from Katie Smith (CPD Accredited)
EP5 - Breaking Barriers in Banking: Kathy Griffin's Path to Empowering Risk and Compliance Leadership (CPD Accredited)
Let's discuss how I could help; book a meeting now!
Should you have any questions or if you'd like to discuss how our services can specifically benefit your organisation, don't hesitate to reach out to me directly at [email protected] or call me at +44 7700 160052. You can also book a meeting directly by clicking on the button below.
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