From the course: Introduction to Risk Management

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Conduct risk

Conduct risk

From the course: Introduction to Risk Management

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Conduct risk

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- [Instructor] Conduct risk refers to the potential risk arising from inappropriate or unethical behavior within an organization that may harm its customers, stakeholders, or the broader market. It encompasses actions or behaviors that violate laws, regulations, internal policies, or ethical standards, and can result in reputational damage, legal penalties, financial loss, and loss of customer trust. Conduct risk is particularly relevant in industries such as banking, insurance, investment management, and other financial services where customer interactions, financial transactions, and the handling of sensitive information are commonplace. It focuses on the conduct of individuals and the overall culture within an organization, including the behavior of employees, managers, and senior leadership. Recent examples of conduct risk that banks have been fined for include selling products or services to customers that are unsuitable for their needs, engaging in activities to manipulate…

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