“The financial crisis of 2008 exposed deep-seated flaws in the financial system,” notes Eva Hüpkes, Head of Regulatory and Supervisory Policies at the Financial Stability Board (FSB), in an In Focus essay featured herein. [See the In Focus Article Why Have Regulatory Reforms to Date Failed to Prevent Governance Failures?] The crisis highlighted the importance of governance and ethics in finance, and policymakers subsequently sought to promote higher standards of corporate governance, industry culture, ethics, and trust, Hüpkes writes. “So why have regulatory reforms to date failed to prevent governance failures?” she asks. “One possible explanation is that supervisors and regulators have been too focused on technical measures,” Hüpkes offers.
“Values and culture are keystones of governance as they drive behaviours of people throughout the organisation and the ultimate effectiveness of its governance arrangements,” she adds. “Compliance and risk management processes are necessary but not sufficient.” Echoing Professor Hodgson, Hüpkes argues that effective bank examination requires that we take “a holistic view of all aspects of the risk governance framework rather than looking at each facet in isolation.”
This content is available to both premium Members and those who register for a free Observer account.
If you are a Member or an Observer of Starling Insights, please sign in below to access this article.
Members enjoy full access to all articles and related content from past editions of the Compendium as well as Starling's special reports. Observers can access a limited number of articles and may purchase articles on an ala carte basis.
You can click the 'Join' button below to become a Member or to register for free as an Observer.
Join The Discussion