This paper
addresses the topic of the assessment and management of conduct risk within
financial institutions. The research also focuses on some of the new major governance
topics on the board’s agenda, stressing the value of corporate reputation within
the company’s culture. Attention is also drawn to the need to introduce a new dynamic,
system-wide perspective on culture within financial organizations, attempting to
align formal and informal aspects and to focus on individuals. The topic of conduct
is thus explored from the point of view of individuals within the organization,
analysing different factors which might influence their behaviour, such as
incentives, peer influence and other psychological factors. The attention is
then focused on the importance for people at any level of the organizational
structure to spread the values set from the top. Finally, possible solutions
are suggested, such as the introduction of internal models tailored to assess
the organizational conduct.