Tyler Woollard
Tyler Woollard

Compliance Consultant

Definitions of Conduct Risk

“Misconduct risk refers to the risks attached to the way in which a firm and its staff conduct themselves. As such, it includes how customers and investors are treated, mis-selling of financial products, violation of rules and manipulation of markets.”

European Systematic Risk Board (2015), “Report on misconduct risk in the banking sector” Tweet

“Conduct risk is the risk of inappropriate, unethical or unlawful behaviour on the part of an organisation’s management or employees. Such conduct can be caused by deliberate actions or may be inadvertent and caused by inadequacies in an organisation’s practices, frameworks or education programs.”

Australian Securities and Investments Commission (2014), “Market Supervision Update Issue 57” Tweet

“Market conduct risk is the risk of loss or harm to consumers and counterparties arising from undesirable market conduct practices by an institution, and/or its representatives, and/or their inability or unwillingness to comply with the requisite market and business conduct requirements.”

Monetary Authority of Singapore (2015), “MAS’ framework for impact and risk assessment of financial institutions” Tweet

Conduct risk is understood as the risk of “consumer detriment arising from the wrong products ending up in the wrong hands, and the detriment to society of people not being able to get access to the right products”

Financial Conduct Authority (2013), “FCA Risk Outlook 2013” Tweet

“Conduct risk means the current or prospective risk of losses to an institution arising from inappropriate supply of financial services including wilful or negligent misconduct.”

European Banking Authority (2014), “Draft Guidelines for common procedures and methodologies for SREP” Tweet

“Conduct risk is derived from the business actions taken and the conduct which is shown at each stage of the product and which might have harmful impacts such as negative outcome for the clients.”

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