This lesson examines the role of corporate governance, risk culture, and the regulatory frameworks that shape risk management practices .

7.1 Governance and Risk Oversight
Effective governance is essential for sound risk management . The board of directors and senior management are responsible for setting the risk appetite, overseeing risk management, and ensuring a strong risk culture . Corporate governance is a key element of the risk management framework, with a focus on board oversight, transparency, and accountability .

7.2 Risk Culture and Conduct
Risk culture is the shared values and beliefs about risk within an organisation . The “tone from the top” set by senior management is critical in shaping risk culture . A strong risk culture promotes ethical behaviour, open communication, and a willingness to escalate concerns . Conduct risk is a specific focus of regulators, referring to the risk of poor outcomes for customers due to a bank’s behaviour .

7.3 The Regulatory Framework
Risk management in financial services is heavily influenced by national and international regulations. Key standards include:

• Basel Accords: International standards for bank capital and risk management .

• Solvency II: European regulatory framework for insurance companies .

• Dodd-Frank Act: U.S. post-crisis reform legislation .

• IRM and NYIF Curricula: These programmes cover regulatory requirements and their impact on risk management practices .