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Managing Conduct Risk in Business: A Holistic Approach

In today’s fast-paced and ever-changing financial services sector, managing conduct risk has become a top priority for businesses. The Central Bank of Ireland (CBI) and other regulators expect firms to have a robust framework in place to identify, mitigate, and manage conduct risk.

Embedding a Conduct Risk Framework

To meet these expectations, firms must tailor a Conduct Risk Framework to their unique business needs, taking into account factors such as size, business model, and geographic reach. This framework should be aligned with the firm’s risk appetite and management process, and regularly reviewed by the board of directors.

Key Components of a Conduct Risk Framework

KPMG has identified six key components that firms must consider when implementing their Conduct Risk Framework:

  • Governance and Organisation: Aligning governance structures to ensure effective conduct risk management.
  • Culture and People: Developing a culture that promotes ethical behavior and good conduct practices.
  • Risk Management: Identifying, assessing, and mitigating conduct risks through robust risk management processes.
  • Conduct Risk Strategy: Defining the firm’s approach to managing conduct risk and aligning it with its overall business strategy.
  • Continued Engagement: Encouraging ongoing engagement and communication between stakeholders to manage conduct risk effectively.
  • Metrics and Monitoring: Establishing metrics and monitoring systems to track and measure conduct risk performance.

Conduct Risk MI: A Crucial Component

Effective monitoring information (MI) is essential for a firm’s Conduct Risk Framework, providing a clear view of overall risk management and identifying areas of poor conduct. MI should be aligned with key conduct risk areas, provide quantitative and qualitative analysis, and use real-time data where possible.

KPMG’s Expertise in Conduct Risk

KPMG’s Risk Consulting team has extensive experience in conduct risk and regulatory support across the financial services sector. Our experts can assist firms in implementing a Conduct Risk Framework, providing guidance on regulatory expectations, designing and implementing conduct risk training, and assessing the completeness and effectiveness of existing frameworks.

Contact Us

For more information or to discuss your firm’s conduct risk management needs, please contact: