COMMENTARY: Safeguarding financial ­firm cultures: five focus factors for directors

Board members have the difficult job of overseeing the success of a firm without getting involved in day-to-day management or operations.  Increasingly, they are expected to understand compliance and other risks of misbehavior, particularly as those risks have been shown to impact financial performance.

In a commentary I co-wrote with Mike Silva, Partner and Chair of the Financial Services Regulatory practice at DLA Piper, we emphasize the role of corporate culture in promoting good behavior as well as financial stability.

As we describe in the article originally published on Thomson Reuters’ Accelus platform:

Regulations, rules, and internal procedures serve as important guardrails for the prevention of misconduct and ethical lapses, but culture is the foundation upon which those guardrails are set. The stronger the culture of integrity, the sturdier the guardrails and the better the organization is able to withstand the pressures of profit­and­loss (P&L) demands, poorly designed incentives, rogue employees, weak audit and compliance programs, and other factors that often provide the motivation and opportunity for misconduct and ethical lapses. 

Directors can encourage management to proactively assess their firm’s culture, even before there’s the threat of a scandal or other regulatory violation. Silva and I provide five recommendations for board members, including a focus on diversity as well as organizational fairness.

Read the complete article online >>

*image courtesy of ucheck

Register for the upcoming Bank Culture Reform & Behavioral Science event on April 9 in New York City to hear more from Azish Filabi and fellow experts as they expand on the themes of this piece.