, but remain aspirational or even illusory unless they are tied to real consequences. 4 what does it mean for a firm to profess to putting the customer first, if employees are compensated and promoted regardless of what ’ s good for customers? or, worse, if they are not held to account for activities that can harm customers? if we focus on nothing else in today ’ s conference, let ’ s explore how best to structure incentives and reinforce accountability to align with core purposes and first principles. to put it very simply, incentives drive behavior, and behavior establishes the social norms that drive culture. if the incentives are wrong and accountability is weak, we will get bad behavior and cultures. this implies a role for both firms and supervisors. firms need to continually assess their incentive regimes so that they are consistent with good conduct and culture. when they are not consistent, the incentives need to be changed. supervisors should also play a role in assessing firms ’ incentive structures. for example, they should evaluate : 1 / 3 bis central bankers'speeches how is compensation determined? in particular, is questionable conduct ― such as compliance violations ― consistently reflected in decisions about compensation and promotion? do risk managers have the appropriate authority to challenge frontline revenue producers and prevent activity that is questionable? when that occurs, are there appropriate negative consequences for the frontline revenue producers? when people speak up to point out potential conduct issues, how are they treated? are they held up as examples to emulate, or are they discouraged or even penalized? the answers to these questions should indicate whether incentives must be changed in order to foster the appropriate behaviors and culture. the primary responsibility for reforming culture — and changing incentives — belongs to the industry. however, the industry does not act alone. the public sector can play an important role as well. i ’ ll discuss that issue this morning with my colleagues norman chan, chief executive of the hong kong monetary authority, and minouche shafik, deputy governor of the bank of england. later this morning another panel will discuss the ways in which supervision can further contribute to improving bank culture. let ’ s also consider ways in which new laws or regulations might help — especially to overcome perennial collective action and first - mover problems that are common across the industry. two years ago i proposed solutions to two such obstacles to reforming culture. first, there should be a database of banker misconduct to combat the problem of “ rolling bad apples. " 5 second, a baseline assessment of

supervisors, risk managers, economists, traders and lawyers contribute insights from their respective professions that lead to better outcomes. in the spirit of learning from other disciplines, i am delighted to introduce today ’ s keynote speaker. some of you may recall that, two years ago, sir david walker opened our first culture conference with the words, “ i am grateful to the philosopher onora o ’ neill for reference to very relevant advice. " 8today we have gone to the source. baroness o ’ neill is professor emeritus of philosophy at the university of cambridge, former president of the british academy, and former chair of the united kingdom ’ s equality and human rights commission. she was appointed a life peer and member of the house of lords in 1999, and, in 2007, was elected an honorary fellow of the royal society. today, baroness o ’ neill serves as a member of the banking standards board. her 2002 lectures on trustworthiness — reprinted in the book a question of trust — have been tremendously influential among new york fed staff working on culture. baroness o ’ neill, the floor is yours. 1 stephanie chaly, james hennessy, jacqueline mccormack, thomas noone and joseph tracy assisted in preparing these remarks. 2 william c. dudley, ending too big to fail, remarks at the global economic policy forum, november 7, 2013. 3 thomas c. baxter, jr., the rewards of an ethical culture, remarks at the bank of england, january 20, 2015. 4 daniel awrey and david kershaw, “ toward a more ethical culture in finance : regulatory and governance strategies, ” in nicholas morris and david vines, eds., capital failure : rebuilding trust in financial services, 284 ( 2014 ) ( “ while codes of conduct, ethics, and best practice can be drafted and held up as identifying desirable behaviors, the norms these codes purport to reflect may be overpowered by other countervailing influences. ” ). 5 mark egan, gregor matvos, and amit seru, “ the market for financial advisor misconduct, ” working paper 22050, national bureau of economic research, february 2016. 6 gillian tett, the silo effect, 45 ( 2016 ). 7 ignazio angeloni, ethics in finance : a banking supervisory perspective, remarks at the conference on “ the new financial regulatory system : challenges and consequences for the financial sector, ” september 26, 2014. 8 david walker, trust and trustworthiness in banks and bankers