The views and opinions expressed in this article are those of the thought leader and not those of CeFPro.
By Soren Agergaard Andersen, Chief Risk Officer, Nordea Asset Management
Why is it so important for institutions to develop and promote risk culture agendas and align conduct?
A strong risk culture is a prerequisite for the sustainable success of any financial company nowadays. By promoting risk culture, we encourage open and honest communication, knowledge sharing, learning from best practice and the commitment to responsible business behaviour.
Companies with a strong risk culture are the ones that have fewest conduct issues, that consistently learn from mistakes (own and others), and that come through crises like the recent in the safest way.
How can an effective risk culture influence conduct agenda?
A strong risk culture in a company can be seen as the risk and control function being one big organism, where the commitment and awareness is on everybody’s mind. Optimally this will also help to support a commitment to conduct – doing what is right as the most natural thing.
What are the current regulatory standards and what are the challenges involved in compliance of those standards?
Risk culture cannot be defined in a formula or enforced in a company. It needs to grow from inside. Management needs to be conscious about their role, as tone-from-the-top is one of the most important factors. If parts of top management does not commit to this, there will be areas in the organisation where the culture doesn’t align which can have a huge impact.
Why is it important to link good governance and culture to a sustainable business model?
The business model will not be sustainable without a proper focus on good governance and culture. But having one does not automatically give you the other. In the process of building or strengthening a governance framework, focus needs to be on the current – and wanted – culture. Meeting regulatory requirements doesn’t automatically warrant a strong culture. But building the right governance framework, can nurture and support the risk culture you want.
Where do you see the future of culture and conduct in light of increased remote working?
These are challenging times – also for culture and conduct. My view is, that the companies with a strong culture also are the ones with the best chance of being successful despite the challenges.
But with people working remotely for a prolonged period of time, you can easily risk that the culture fades a bit – or changes. Suddenly people are more alone, sit in thousand different places and only have contact with colleagues through the phone. The commitment to a common culture diminishes even though not deliberately, and management has a huge job in either finding ways to keep the culture, or built a new and better one.