with the right tools and technology, the right level of commitment, and the right people at the table, we can build cultural capital and mitigate misconduct risk. we all have a role to play in mobilizing our organizations to advance this critical work. thank you for your attention. 5 / 6 bis central bankers'speeches 1 i would like to thank stephanie chaly, robert fitchette, jim hennessy, and jackie mccormack for help preparing these remarks. 2 federal reserve bank of new york, reforming culture and behavior in the financial services industry : progress, challenges, and the next generation of leaders, june 18, 2018 and workshop on culture measurement and assessment, june 21, 2017. 3 see sr 16 – 11 : supervisory guidance for assessing risk management at supervised institutions with total consolidated assets less than $ 50 billion, june 8, 2016 and sr 12 – 17 / ca 12 – 14 : consolidated supervision framework for large financial institutions, december 17, 2012 for details for small and large banks, respectively. board of governors of the federal reserve system, federal reserve board requests comment on proposed guidance that would clarify board ’ s supervisory expectations related to risk management for large financial institutions, january 4, 2018. 4 stephanie chaly, james hennessy, lev menand, kevin stiroh, and joseph tracy, misconduct risk, culture, and supervision, federal reserve bank of new york, december 2017. 5 stiroh, kevin j., the complexity of culture reform in finance, october 4, 2018. 6 board of governors of the federal reserve system, federal reserve board invites public comment on two proposals ; corporate governance and rating system for large financial institutions, august 3, 2017. 7 see banking standards board. 8 board of governors of the federal reserve system, federal reserve board requests comment on proposed guidance that would clarify board ’ s supervisory expectations related to risk management for large financial institutions, january 4, 2018. 9 dudley, william c., strengthening culture for the long - term, june 18, 2018. 10 lois v. brown, psychology of motivation, 2007. coon d, mitterer jo. introduction to psychology : gateways to mind and behavior with concept maps. belmont, ca : wadsworth ; 2010. oudeyer, p. and kaplan, f. what is intrinsic motivation? a typology of computational approaches. front neurorobotics, 2007. 11 see banking standards board, annual review 2017 / 2018. 12 department of finance, minister don

, overseeing business lines and risk management, and ensuring compliance with internal policy, procedures, regulations and laws. 8 development of a firm ’ s cultural capital links directly to these core responsibilities and is evidenced by behavior throughout the firm. to address these concerns and build cultural capital, some firms have established culture and conduct committees or groups that meet regularly to review cultural indicators and assessment efforts. providing these groups with sufficient stature, developing the proper infrastructure to support them, and defining clear roles and responsibilities are essential for success. it is critical that there is alignment between the board, senior management, and middle and lower management on issues of conduct and culture, as employees take cues from their direct managers even more than the tone from the top. the performance management framework established by senior management sets powerful incentives to influence conduct and culture within a firm. 9 financial incentives, however, are not the only drivers of culture and conduct. employees alter their behavior based on a variety of formal and informal, intrinsic and extrinsic motivations. intrinsic motivations could include growth opportunities, independence, power, and social factors, while extrinsic motivations could include pay, benefits, profit sharing, or other forms of awards. 10 with this range of motivating factors and the impact they have on the culture in mind, a number of firms have integrated “ how ” factors into an employee ’ s performance evaluations by assessing the methods used to achieve a performance goal alongside the “ what ” components such as contributing to their group ’ s financial performance. industry benchmarking another perspective is from the industry as a whole. i think we can gain important insights by looking across the financial industry, identifying best practices, and understanding what approaches are most effective in positively influencing conduct and culture. conferences and workshops like those hosted regularly by the new york fed and others can help. in addition, standardized metrics and indicators can provide insights when assessing changes over time and across firms. the bsb, for example, provides one lens on assessing culture change for a broad cross - section of financial services firms operating in the u. k. 11 each firm participating in the survey has the ability to see its outcomes relative to others and the industry average. this type of industry - wide assessment gives firms insight into areas they can individually focus on, as well as areas they may want to address as an industry. the u. k. is not alone in this approach. in december 2017, the chief executives of the five main retail banks in ireland informed