culture is needed in order to measure progress. i proposed an industrywide survey, but there may be other good alternatives. once again, i invite the industry to take the initiative on these issues, and to look to the public sector for support. i also hope that we will attend to issues that we may have overlooked in our earlier discussions. gillian tett of the financial times argues in her new book, the silo effect, that the key to understanding any culture is identifying and explaining “ social silences " — the issues that are not being discussed. 6 where do we encounter those issues in reforming the culture of financial services? one place might be the role of investors in firms. are their expectations of returns reasonable and consistent with a trustworthy financial services industry? another place might be the boardroom. boards should establish and promote a culture based on ethics and respect for law. have boards risen to this challenge? if not, what ’ s needed? and, going forward, are we thinking hard about how technological change will influence incentives, behavior and culture? we ’ ll hear these issues discussed in several panels today. these issues require thoughtful reflection by the industry. the need for reflection, though, is not limited to boards, or even to banks. regulators and bankers alike can benefit from such a habit. in that vein, i want to share with you an everyday checklist proposed by ignazio angeloni of the european central bank. 7 he has posed six questions that seek to make responsibility for culture both individual and routine : are you doing what you promised to do? are you using your best knowledge and intention in doing it? are you doing what public authorities, superiors, colleagues and business partners expect you to do, and if not why? are you conforming to the mission and the values of your company, as they are publicly 2 / 3 bis central bankers'speeches stated? will your actions enhance public confidence in your company and in the financial sector? finally, and crucially, would you behave similarly if your actions were publicly observed? i suspect that while seemingly simple, the discipline of asking ourselves these questions on a regular basis and answering them thoughtfully and honestly may be more challenging, thought provoking and effective than one might initially think. i thank the staff at the new york fed who put together today ’ s program, and their colleagues who are in the audience and watching today. the diverse professional training and experience of our staff are among the new york fed ’ s strengths. bank

kevin stiroh : reform of culture in finance from multiple perspectives remarks by mr kevin stiroh, executive vice president of the financial institution supervision group of the federal reserve bank of new york, at the garp risk convention, new york city, 26 february 2019. * * * as prepared for delivery introduction i would like to begin by thanking the global association of risk professionals for the opportunity to speak at this risk convention. 1 as a bank supervisor, i am obviously very interested in the topics of risk management and risk measurement. an important part of my job is to interact with the financial industry to better understand the issues you face and how we can work collaboratively toward our shared objective of promoting sustainable financial intermediation and a safe, sound, and stable banking and financial system. as risk professionals, you are all steeped in the intricacies of risk management and risk measurement. value - at - risk, the three - lines - of - defense model, and controls and testing frameworks are second nature. this is particularly true when we talk about the most familiar and well - studied financial risks such as credit, market, and liquidity risk, and even non - financial risks such as operational, compliance, and legal risk. we all acknowledge the critical importance of these issues, but today i will talk about misconduct risk and the need to develop a healthy corporate culture to mitigate it. i ’ ll focus on the importance of addressing these issues from multiple perspectives including those of boards of directors, senior management, industry groups, and the official sector. this topic might be less familiar to some — the terms are newer and the assessment frameworks are less developed — but i believe it is critically important. both the official sector and many of your firms have put considerable emphasis on improving corporate cultures and reducing misconduct risk, but we continue to see striking cases of misconduct both in the u. s. and abroad. clearly, more needs to be done. many of the insights i will share today are drawn from interactions with industry participants and members of the official sector through outreach and industry conferences and workshops on the topic, including events hosted by the federal reserve bank of new york. 2 i am confident that continued commitment and collaboration will contribute to better outcomes in this vital area. before proceeding, i ’ ll emphasize that i am speaking for myself and not the federal reserve bank of new york or the federal reserve system. influencing culture from multiple perspectives prudent risk management is a fundamental aspect of the business of banking,