Achieving excellence in Conduct Risk Management: 10 principles for strong MI

Dec 30th '23

In recent years, the ever-changing landscape of financial services, the concept of “conduct risk” has emerged as a pivotal concern for both firms and regulators. The Financial Conduct Authority (FCA) in the UK has placed a significant emphasis on the integration of conduct risk management within the risk management frameworks of firms. This integration, however, must be complemented by robust management information (MI) systems. In this article, we delve into the 10 principles that underpin strong conduct risk mi, drawing on regulatory expectations and practical insights.


  • Principle 1: clarity and relevance –  Crafting MI with precision

Effective MI starts with clarity and relevance. Mi reports should be crystal clear, leaving no room for ambiguity. Each piece of information must be directly related to conduct risk, ensuring that it serves a specific purpose in decision-making.


  • Principle 2: timeliness and frequency – The power of timely data

In the realm of conduct risk, timing is crucial. Mi should be timely and updated at a frequency that aligns with the dynamic nature of risk. Real-time or near-real-time reporting enhances a firm’s ability to detect and address emerging issues promptly.


  • Principle 3: comprehensive coverage – Leave no stone unturned

A robust mi framework covers all aspects of conduct risk. It should encompass data from various sources, including customer complaints, employee feedback, and regulatory alerts. Comprehensive coverage ensures a holistic view of risk.


  • Principle 4: accuracy and consistency – The bedrock of trust

Accuracy and consistency in data collection and reporting are non-negotiable. Errors or discrepancies can erode trust in the mi system. Implement robust data validation processes to maintain integrity.


  • Principle 5: forward-looking indicators – Anticipate, don’t react

MI should not only reflect historical data but also incorporate forward-looking indicators. Predictive analytics and early warning signals enable firms to proactively mitigate conduct risk.


  • Principle 6: customization and flexibility – Tailoring MI to your needs

One size doesn’t fit all. MI should be customizable to suit the unique risk profile and business model of each financial services firm. Flexibility ensures relevance.


  • Principle 7: clear accountability – Who’s responsible for MI?

Accountability is paramount. Define clear ownership of mi within the organization. Designate individuals or teams responsible for data accuracy, reporting, and action plans.


  • Principle 8: effective communication – Sharing insights for informed decisions

MI is not valuable if it’s confined to reports. Effective communication channels should be established to disseminate insights across the organization. It should inform decision-making at all levels.


  • Principle 9: integration with risk framework – MI as the cornerstone

MI should seamlessly integrate with the overall risk management framework of the firm. It should be considered a cornerstone, providing critical inputs for risk assessments and strategies.


  • Principle 10: regulatory compliance – Staying ahead of regulatory expectations

Lastly, but crucially, mi must align with regulatory expectations. Keep abreast of evolving regulations and adapt your mi practices accordingly to ensure compliance.


in the complex landscape of financial services, the management of conduct risk stands as a paramount duty. To excel in this endeavour, a strong foundation of management information (MI) is indispensable. By adhering to the ten principles outlined in this article, financial services firms can establish mi systems that not only meet regulatory expectations but also enable proactive risk management. In an era where conduct risk is at the forefront, the value of robust MI cannot be overstated. It’s not just data; it’s the key to informed decision-making and sustainable success.


We hope this article proves insightful and the download helps you get past these issues for your business. Thank you for reading!


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