George Osborn and Mark Carney are determined that the culture of banking as it has become accepted by the community at large, although deeply criticised over the years, can actually change.
I found this interview from the FT quite interesting to ponder on and a link to the Financial Times article can be found here [LINK].
FT Interview on the Double Act | LINK
Risk management systems in the financial sector generally strive for a certain level of completeness, integration and aggregation. They are also relatively model heavy and while some people believe this is a curse for the industry, it isn't the real problem. Bank's risks systems generally fail not because of sophistication, complexity or responsiveness but due to culture.
Banks exemplify why risk management culture is so important in an overall risk management framework and going on recent experience, it is becoming obvious to the casual observer that simply fining banks for breaches in compliance isn't really that effective for discouraging malpractice. Increasing the size of the penalty for breaches doesn't seem to be having a big enough affect on rogue banking either. George Osborn and Mark Carney too, have moved beyond this linear thinking that a bigger stick is the solution for those that flaunt the principles of morality. All this aside, their Bankers Banquet speech leaves a couple of questions hanging in the air ...
The big question of course is; can you take the Machiavellian culture out of banking?
If you can, how would you go about this?