Many financial services firms are now working to embed conduct risk management practices within their wider risk management frameworks, with a view to taking a consistent approach across their business units. Here are some of the key steps in developing a Conduct risk framework.
Effective management of conduct risk is seen as a key component of the strategy, with the potential to reap benefits as well as avoid costs such as fines, redress payments or reputational damage. Well managed responses to risk events also allow firms to demonstrate their commitment to positive customer outcomes.
Personal accountability is also an emerging theme. Staff in financial services businesses need to take ownership of conduct risk management.
It is recommended to build a Conduct risk management framework around the product life cycle.
Below are some of the key steps in developing a conduct risk management framework. The various elements of the product life cycle should be addressed in each of the below steps.