Conduct risk is at the core of a new approach to regulating financial services, behavioural regulation, whose new agencies and public prosecutors have spread rapidly across the world.
Its prosecutors intervene assertively to challenge financial service providers to show clear evidence of a new customer-centric approach, which understands and responds to the hidden drivers of customer behaviour. The prosecutors use their unprecedented powers to levy very large fines and even to imprison wrongdoers - as often for not taking precautions as for any active wrongdoing. Providers' product design, risk-taking, and selling must all perform with transparent good intent.
Conduct Risk Management is a tool for recognizing, acting on, and predicting conduct risk impacts in regulated business. Not merely defensive, it also gives managers better ways to protect and enhance the value of their enterprise.
From a qualified behavioural scientist with more than 20 years' experience in financial markets, Conduct Risk Management sees beyond econometric and other 'box-ticking' traditional tools of risk management. Whilst protecting senior managers, it also helps all staff to make positive use of conduct risk to promote behaviour which the regulator will accept as 'good'.
Good behaviour is good business: besides keeping conduct regulators happy, a healthy, human-focused risk culture builds enterprise value. The new conduct regulations personally affect every manager in financial services - and their suppliers - with new regulations making senior managers liable to imprisonment for failures in organizational conduct.
Conduct Risk Management sets out plainly what practitioners need to know to understand the regulator's intentions, to prove compliance, protect competitiveness and maintain licence to operate.
Industry Reviews
"With the latest shocks to unsettle the predictable and rational world of deterministic and logical data-driven assumptions analysis, culminating in our inability to foresee Brexit and the rise of Donald Trump, financial practitioners would be well advised to pick up, discuss and take note of the behavioural approaches outlined in Dr Miles's Conduct Risk Management. The tools in here will help practitioners get themselves 'match fit' for managing risk in a world where almost everything you thought you knew may turn out to be wrong." * Dr David Hancock, Director HM Government Cabinet Office - Infrastructure and Projects Authority; former Head of Risk for TfL *
"Dr Miles has important and timely lessons for the effective management of corporate risk, but this book goes well beyond a narrow risk focus and, with its application of and insights from behavioural science, will be of interest to students and practitioners of ethics, culture and conduct in financial services and, indeed, more widely. I'd encourage all bankers, regulators and students to read this book, which balances well academic study with practical, real-world lessons and conclusions." * Simon Thompson, Chief Executive, Chartered Banker Institute *
"A refreshingly enjoyable read, but more than that, a timely expert insight into why and how the financial sector has to change fundamentally the way it engages with politics and public goods. This change of outlook has implications far beyond financial markets - there are valuable lessons for policy-making at the highest level." * Matthew Taylor, Chief Executive, RSA; Head of the Prime Minister's Employment Law Review, 2016 *
"A lively, interesting and very practical guide to understanding how regulators think, and getting on the front foot ahead of conduct risk. Using Dr Miles's techniques to 'work risk-aware' makes good business sense, is highly engaging for all business people and is certainly a better basis for effective compliance than old fashioned box-ticking." * Scott Wallace, Chief Risk Officer and Executive Director - Governance, Legal, Risk & Compliance *
"Many practitioners are at a loss how to deal with Conduct Risk, yet clearly it's a vital topic to understand, now that the threat of prosecution hangs daily over every senior manager. Roger Miles is one of the very few genuinely expert sources on what the science of 'behavioural regulation' means for day-to-day business practice. This is a great opportunity to gather his insights, and enjoy his lively curiosity about where regulation comes from and will take us to next." * Donald Macrae, Senior Consultant on Regulatory Reform, World Bank *
"Roger Miles has done an excellent job of animating and explaining in plain English this challenging area of regulation. His book should therefore be essential reading for any compliance and risk professional in order that they better understand the nature of conduct risk and how to mitigate the risks arising." * Brian Harte, Managing Director, Berkeley Research Group; former Group Head of Compliance and Regulatory Affairs, Barclays *
