and timely that we take the ethical challenge seriously in malaysia. we must ensure that the unflattering history that we have seen elsewhere does not repeat itself here. as stewards of the people ’ s money, the finance community must step up to the moral obligation we owe to our society. making sense of ethics we have seen some shocking behaviour around the world of finance in recent years. the examples i have relayed are replete with “ greed ”, “ dishonesty ” and “ recklessness ”. we are led to consider – how can respectable and well - educated human beings behave in this way? in answering this question, i find the work of philip zimbardo on the psychology of evil to be very helpful. ethics is a slippery subject. concepts like professionalism and integrity are inherently subjective. as financiers, we often feel – out of our depth – when dealing with issues of human behaviour. we tend to be more comfortable with hard numbers and data. this is why i find it helpful to draw insights from psychology. zimbardo ’ s work draws from well - known controlled studies such as milgram ’ s electrocution exercise and the stanford prison experiment. he also examines real - life cases like abuses in the abu ghraib and guantanamo bay prisons. all these cases revealed that ordinary people are a lot more capable and willing to engage in shocking and unethical conduct than we would expect. for instance, the prison studies uncovered deeply disturbing abuses by guards in both real - life and controlled settings. verbal insults. humiliation. people being treated like animals – all these by men and women who had loving families, a good upbringing and otherwise ordinary lives. zimbardo proposes a threefold framework of “ system ”, “ situation ” and “ person ” to make sense of the factors affecting such behavioural choices. he points out that ethical and behavioural choices are often the result of a dynamic interplay. “ what do the people bring into the situation? what does the situation bring out of them? and what is the system that creates and maintains that situation? ” it is fascinating to note his conclusion that “ personal ” convictions matter, but only slightly. the overwhelming evidence shows that the “ situation ” and “ system ” – pose the greatest influence on behaviour. while this appears to paint a grim and depressing picture of humanity, i believe that there is a silver lining here. these findings suggest that, given the right “ situation ” and

the values for the financial sector are ultimately solidified by private sector forces. in particular, professional bodies have a crucial role to play. this role includes – but is not limited to – promoting competence within the financial sector. beyond training, these organisations are uniquely positioned to build for financiers, a sense of pride and societal purpose toward their vocation. the asian institute of chartered bankers ( aicb ) is making substantial progress in this direction for the banking profession. i am pleased to note that its flagship chartered banker curriculum dedicates a significant emphasis on professional ethics. this stands alongside various other efforts for training and standard - setting, including those by aif, iclif, sidc, fide forum, ppkm and fspb. i wish to take this opportunity to specifically commend the aif and fspb for their initiatives, including today ’ s event. these draw the much needed attention by the industry to this important subject. the system of values affecting behaviour does not only depend on the sector - wide legal and regulatory frameworks and the vibrancy of the professional community. also, of crucial importance, is the role of the board and senior management in each organisation. as has been often repeated, these leaders set the tone from the top. this is established through official decisions and formal statements, including the corporate values and various codes of conduct. however, their role goes much further than that. more than their words, the board and senior management determine the prevailing values of the organisational ecosystem through their attitudes, actions and decisions – especially those relating to professionalism and integrity. do they give the impression that the ends always justify the means? how vigorously do they question sudden surges in a business unit ’ s profitability? are they willing to overlook ethically questionable actions so long as the firm is technically within the bounds of the law? how do they react to ethical failures and misconduct? how does compromising the policies of the organisation affect bonuses and promotion? apart from the board and senior management, the system affecting each organisation is also determined by the shareholders. the capitalist system depends on owners of capital to promote sustainable value creation through market discipline. is it simply short - term profits that matter? are there other social or environmental purposes that must be safeguarded? to this end, the securities commission ’ s malaysian code for institutional investors articulates the stewardship 3 / 5 bis central bankers'speeches role that shareholders ought to play. ultimately, shareholders need to