Ch. 11 Articles Flashcards
Conduct Risk
Unethical business practices, individual behaviors, and organizational behaviors that have led to outcomes that have harmed either individual players or the financial system
How does the response to Conduct Risk need to be?
The response to conduct risk needs to be holistic if it is to be effective
How does a company manage conduct risk?
By building sustainable business practices and encouraging appropriate behaviors that align to the values and overall culture of the organization
Conduct
The manifestation of an organization’s culture and how the culture is put into practice
What is the role of the business as the first line of defense against misconduct?
The goal and responsibility of the business should be to behave ethically and properly and to build the infrastructure needed to ensure that the business conducts itself appropriately
What is the ultimate line of defense for shareholders?
Board of Directors
Strong Cultures have what two elements?
- High level of agreement about what is valued
- High level of intensity with regard to those values
Managers who “Carry the Banner”
Managers who turn principles into practice
Often use the power of stories and symbols to promote ethical behaviors
Procedural Justice
Internal matters are adjudicated equitably at all levels of the organization
Create Listening Posts
Done by conducting cultural assessments that get at the core of how people behave and what they think
Why do Ethical Failures Occur?
Ethical failures often occur because what was known or should have been known was not addressed.
When ethics isn’t considered a business fundamental, vulnerability increases
Four Recommendations for Making Ethics Real
1) Accept ethics as a business fundamental
2) Encourage in the culture ‘Giving Voice to Values’
3) Share personal values as a leader
4) See ethics as finance’s best ally
