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Strengthening risk culture in financial institutions: evidence from UK based investment banks

Strengthening risk culture in financial institutions: evidence from UK based investment banks

Brickman, Karen ORCID: 0000-0002-0818-7485 and Hiebl, Martin (2016) Strengthening risk culture in financial institutions: evidence from UK based investment banks. In: 11th Conference on New Directions in Management Accounting, 14-16 Dec 2016, Brussels, Belgium. (Unpublished)

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Abstract

This paper explores whether and how risk culture can be changed in financial institutions post the 2008 financial crisis. Power imbalances between revenue-generating staff and the control functions were identified as one major weakness of many banks’ risk culture prior to the crisis. After the crisis, regulatory efforts tried to reduce these imbalances and strengthen risk culture more generally. However, recent evidence suggests that such endeavours were not overly successful and that the above mentioned power imbalances persist. Our evidence on ten UK based investment banks somewhat contradicts this view. We find that such power imbalances can be reduced and that risk culture can be strengthened. At the same time, by drawing on Hardy’s (1996) four dimensions-of-power framework, our analysis indicates that the existing regulation alone is not able to do so, but that further dimensions of power need to be mobilized to bring about risk cultural change.

Item Type: Conference or Conference Paper (Paper)
Uncontrolled Keywords: power, strategic change, remuneration code, risk-taking, risk culture, management control systems, financial services
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
H Social Sciences > HG Finance
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Related URLs:
Last Modified: 16 Feb 2021 14:05
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
Selected for REF2021: None
URI: http://gala.gre.ac.uk/id/eprint/28456

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