An Interview with Professor Kristen Jaconi

Q: Regulators have emphasized the importance of organizational culture as both a risk factor in itself and as an instrumental element of any successful risk management program. What are your views?

A: When I joined the University of Southern California Marshall School of Business faculty in 2018 to teach enterprise risk management and to run what is now the Peter Arkley Institute for Risk Management, I did not appreciate the importance of culture to effective risk management.While consulting at Promontory Financial Group, I saw that prudential regulators had started to concentrate on culture. I remember vividly the then-Federal Reserve Bank of New York President and Chief Executive Officer Bill Dudley’s industry-scathing speech on the reference rate submission scandal, delivered in fall 2014, followed by an even more industry-scathing speech on culture a couple weeks later. That latter speech launched the FRBNY’s Workshop on Reforming Culture and Behavior in the Financial Services Industry and a “culture” initiative that continues to this day. [See also The In Focus Article Culture & Governance Reform Initiatives at the NY Fed]