The importance of managing risk culture

Over the last few years, there has been a noticeable trend in which incidents receive widespread media coverage, provoking strong responses from the public, politicians, and regulatory bodies. Common factors seem to be deficiencies in internal governance and risk culture that can be seen as early warning signs of difficulties ahead. Although the ECB has noted progress in this field for financial institutions, there is still room for improvement. This is why the ECB sets out key supervisory expectations on governance and risk culture, as recently published in the draft Guide on Governance and Risk Culture.