Here’s a question I would ask risk and compliance leaders I’ve work with, or just a general question for all compliance and risk management leaders.
If one of your advisors or staff members made an honest mistake today — a trade error, a client conversation that missed the mark, something that could turn into a complaint — would they call you right away?
Or would they wait. Hope it resolves itself. Only surface it when they’re forced to.
If you could have an honest answer to this question, what would it be?
If it’s “they’d wait,” that’s not a rulebook problem. Your advisors know the rules. They’ve signed off on the policy manual. The issue is they don’t feel safe reporting. They don’t trust that you’ll handle it fairly. They fear the consequences more than they value the relationship.
I call this a self-reporting culture gap, and in 25+ years in this industry, I’ve come to believe it’s one of the most expensive problems a financial services firm can have.
Every problem that gets hidden instead of reported early becomes harder and more costly to resolve. Regulators see proactive self-reporting as a sign of a healthy culture. They see the absence of it as a red flag.
Here’s the part that took me years to fully accept and undersand: this isn’t a compliance training issue. It’s a leadership issue. Rules define the floor — the minimum behaviour you require. Leadership determines how high above that floor your people actually choose to perform.
The gap between the two is where most compliance problems live.
So — would they call you today?
Why Post
The idea behind postings on this platform is to ask questions. Also, hopefully provide ideas, concepts or thoughts that highlight the challenges facing risk and compliance managers in the corporate governance structure. These postings are based on my personal experience, the experiences of others, and developing my understanding of the many leadership challenges, through publications and literature.
It’s my desire to help close the perceived negative gaps between corporate governance and risk/compliance management. There are ways and means to enhance the relationship, which I’ve focused on for several years. Direct message me for additional information on how to create a collaborative governance environment.