Culture as part of risk and compliance

Trading requires focused attention on effective risk management and compliance.

Consequently, risk and compliance culture has become part of corporate culture. Honest reporting of mistakes, accidents and losses (in other words: negative surprises) is a crucial pillar when the idea is to learn from the past. It also requires specific reporting values. However, the human nature has shown over-and-over that people are inclined to pass the blame for incidents to others rather than acknowledging them. Again, taking responsibility is preferred over acting in the capacity of a victim.

The right culture is much needed to properly address the complexity of interactions at work. There is a need for being transparent and frank so that learning takes place. It is very important that both management and the workforce acknowledge and allow mistakes to be made. This means that failure should not be kept a secret, but has to be shared.

The rationale for a good culture can be explained as follows: If traders, brokers, trade surveillance specialists, trade compliance officers and regulators have to respond to the challenges of fundamental uncertainty, whether a fragile market or complex pricing, misconduct, unethical decisions, unfair policies, harmful behaviours and dishonest reporting are not going to result in making these systems more resilient. Just like these principles play at the highest level, they do so equally on the lowest level, namely at the personal level.

Corporate culture is influenced by factors inside organisations, as well as by the outer world. Externally, society itself drives our values. More specifically, media and politics drive our norms. Internally, the highest management does play a key role in influencing culture. They should set the tone, but that is not all. Every employee influences the corporate culture, ranging from middle management to juniors and new hires. Nevertheless, senior managers should perform a key role in driving the behaviours and setting the tone, values and judgement, even more so when a fundamental change in the corporate culture is required.It is important that employers foster psychological safety and learning. This way, employees are better equipped to speak up, collaborate and innovate.