Following the Great Financial Crisis, many regulators around the world looked to embed their staff within the firms they monitored as a means to gain greater visibility into misconduct. It turns out that this may not have been as effective as first imagined.
While embedded employees do enjoy greater visibility, they are susceptible to the very cultures they are meant to supervise. Once they became part of that culture, they were less able to view the firm objectively and to distinguish between ‘normal’ and inappropriate behavior.
This is yet one more example of how traditional regulatory oversight suffers from significant blindspots unless a firm’s culture is taken into account. Starling predictive behavioral analytics equips firms to monitor culture risk directly to detect where high-risk behaviors may emerge, and where they may spread to next.
Read the article: Regulators Split Over How to Keep Banks Out of Trouble