The FSB seeks feedback on its report Guidance on Supervisory Interaction with Financial Institutions on Risk Culture, which aims to assist supervisors in identifying those core practices and attitudes that may be indicators of the institution’s risk culture. Failures in risk culture are often considered a root cause of the global financial crisis as well as headline risk and compliance events (e.g. the London whale, LIBOR manipulation). A financial institution’s risk culture plays an important role in influencing the actions and decisions taken by individuals within the institution and in shaping the institution’s attitude toward its stakeholders, including its supervisors. A risk culture that promotes prudent risk-taking and discourages unrestrained profit maximisation without due regard to risks supports an environment that is conducive to ensuring that emerging risks that will have a material impact on a financial institution, and any risk-taking activities beyond the institution’s risk appetite, are recognised, assessed, escalated, and addressed in a timely manner.  

The FSB invites comments on the draft guidance by 31 January 2014. Responses should be sent to [email protected]