Now Available: Pre-Release Summary of "Supervisors on Supervision"

Starling will soon launch a Public Exposure Draft of its latest Deeper Dive report, "Supervisors on Supervision." Following on the heels of a global stocktake exercise that has convened dozens of senior-most financial sector supervisors worldwide, the study collects emerging views regarding reform efforts aimed at culture risk governance and supervision.

Ahead of that, we have published a Pre-Release Summary, which offers a preview of the themes that will be explored more deeply in the Deeper Dive. The initiative, chaired by Randal Quarles (past-Vice Chair for Supervision of the US Federal Reserve Board and past-Chair of the Financial Stability Board), is structured as four chapters:

Chapter 1 – The Case for Action: Led by Carolyn Rogers (Senior Deputy Governor of the Bank of Canada), this chapter establishes culture as the upstream condition of governance, prudential soundness, and public trust. It notes that ambiguity has become a supervisory risk, and that legitimacy is on the line when discretion is exercised without explanation.

Chapter 2 – The Costs of Doing Too Little: Led by Fernando Restoy (Chair of the Financial Stability Institute), this chapter highlights the cost of culture risk governance and supervision remaining episodic, reactive, and opaque. It discusses how culture within supervisory agencies themselves shapes the effectiveness, timeliness, and legitimacy of their interventions.

Chapter 3 – What Supervisors Have Tried: Led by Wayne Byres (past-Chair of the Australian Prudential Regulation Authority), this chapter reviews past efforts to effect culture risk supervision — from behavioral diagnostics and accountability regimes to data-driven tools and horizontal reviews. It highlights both progress and fragility, distilling key learnings and common barriers from these initiatives.

Chapter 4 – Toward Coherence & Discipline: Led by Elizabeth McCaul (past-Member of the Supervisory Board of the European Central Bank), this chapter outlines the conditions necessary to promote more effective culture risk governance and supervision. It underscores the need for public–private collaboration, with a view to establishing a common evidentiary basis by which to address culture-driven concerns. And it highlights the challenge of achieving cross-border convergence without imposing uniformity.

Supervision is, at its core, an exercise in judgment — and judgment is shaped by culture. Yet culture risk supervision remains underdeveloped, with standards still vague and approaches more often reactive rather than forward-looking. The Deeper Dive issues a call to action: we must define, measure, govern, and supervise these dynamics with greater discipline, clarity, and legitimacy.