The Association for Financial Markets in Europe (AFME) and PwC have published a new report “Conduct Analytics - Insights-led and Data-driven: The Future of Conduct Risk Management”.
One of the challenges consistently highlighted by our Members is the need to develop better data and analytics relating to conduct to identify and (ideally) pre-empt conduct risk. This paper explores how firms can address this by evolving their Conduct risk management frameworks to make better use of Conduct Analytics, supported by a clear and effective Conduct Analytics framework.
For many banks, the use of Conduct Analytics is a journey, with some firms further advanced than others. In recognition of this, we provide a blueprint for firms to use as they develop and review their frameworks, focusing on an “insights-led and data-driven approach”.
There are several key factors that will underpin the success of the advanced use of Conduct Analytics;
- Firstly, it is important for firms to recognise the value in using Conduct Analytics to efficiently identify patterns and trends which in turn provide valuable insights across their entire business.
- Secondly, approaches should be agile and evolve in line with the needs and progression of the business, calibrated to identify new risks as they emerge and periodically reviewed to ensure their effectiveness.
- Thirdly, the paper encourages firms to strengthen their efforts to measure and monitor culture and suggest that in doing so, firms will be able to reduce the additional policing of individuals.