ACCA Report Highlights Critical Role of Risk Cultures in Banking Sector

In a recent special report, the Association of Chartered Certified Accountants (ACCA) delves into the pivotal impact of risk cultures within the banking industry and emphasizes the crucial lessons that financial institutions can learn from recent failures, including those of Credit Suisse and SVB.

Titled "Risk cultures in banking: Where next?" the report is part of ACCA's ongoing series exploring risk governance across various industries. It sheds light on the pressing need for the banking sector to adapt and innovate risk governance and culture, drawing insights from surveys and member engagements.

Rachael Johnson, ACCA’s head of risk management and corporate governance for Policy & Insights, stresses the importance of transparency in preventing operational losses and reputational risk, stating, "A strong risk culture supports this, ensuring trust in information for resilience and prudent risk-taking."

The report challenges the conventional view of risk management solely as a mitigating force against negative outcomes, encouraging professionals to see it as an empowering force enabling informed decisions. ACCA suggests that accountancy professionals can act as "risk super-networkers," aiding teams in making informed decisions and sharing knowledge.

In response to compliance challenges faced by ACCA members within the banking industry, the report calls for increased dialogue between banks and regulators. It identifies behavioral science as a critical area for addressing the complexities of risk cultures, emphasizing that the dynamics of risk are more about human behavior than mathematical models or process design flaws.

Md. Sajid Khan, Director - India, ACCA, urges financial institutions to learn from past failures and underscores the importance of transparency for resilience. The report outlines 10 action points for banks, emphasizing stronger partnerships between risk, support units, and accounting functions.

In the closing remarks, Pav Gill, Wirecard whistle-blower and CEO/founder of Confide, highlights whistleblowing as a powerful pillar of resilience. He urges accountancy professionals to take pride in contributing to a transparent and ethical environment.

ACCA's report provides valuable insights for shaping a proactive, transparent, and ethical banking environment. To access the full report, click here.

About ACCA:

ACCA, founded in 1904, is a globally recognized professional accountancy body that champions inclusion and supports a diverse community of over 247,000 members and 526,000 future members in 181 countries. Their qualifications, continuous learning, and insights equip individuals with the expertise and ethical judgment needed to create, protect, and report sustainable value. ACCA's vision is to develop the accountancy profession the world needs, contributing to a sustainable future for all.