- Banking — Financial regulation — Financial stability
The management of conduct risk continues to present many challenges for financial institutions. Society expects banks to do more than merely comply with the law. Banks are expected to be ‘good corporate citizens’ and to behave ethically. One might argue that they are expected to observe the sprit as well as the letter of the law. However, financial markets thrive on ingenuity and the law allows considerable flexibility to those who are determined to ‘find a way round’ a perceived problem. This chapter revisits, in the context of risk management, the issues concerning ‘grey areas’ and explores the potential benefits of standards that set out what is regarded as accepted practice, adopted either within an individual bank or amongst a group of banks. It also suggests how one might in practice set about developing a standard.
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