The Invisible Co-Worker

Starling Team
Mark Cooke, a Starling advisor, recently authored a post on how the Covid-19 pandemic is changing the way we work. In it, he observes a historical tendency to revert back to “normal” following a crisis.  Covid, however, is likely to result in a “new normal,” and one that challenges our notions of what it is to manage the workplace.  Given a consensus view that remote working will be an enduring feature following the pandemic, how do we manage staff or collaborate with co-workers who are, effectively, “invisible”?

The remote working capabilities demonstrated by banks and financial services firms has been one of the success stories of the Covid-crisis, thus afar.  However, current work circumstances are to become “the new normal,” then firms must start now to prioritize and reimagine several several things: employee well being, developing talent, operations management and corporate culture.

Success in any of these domains will necessitate new tools and processes to support remote work — and those tools and processes have yet to be created.  The future poses many questions and we may end up surprised to some extent in how the office environment is ultimately transformed.  But we should be careful not to lose sight of the human element.  Systems and processes are not enough: both require a well-oiled human element if they are to deliver on promise.

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Culture Audits: Removing the Blindfold

Starling Team

Leaders along all Three Lines of Defence are being held personally accountable for misconduct that takes place on their watch. To avoid individual liability, they must identify leading indicators of risk that allow for “upstream” interventions, say Starling’s Stephen Scott and former HSBC Global Head of Operational Risk and ORX Chairman, Mark Cooke.

Now, culture audit requirements continue to develop as part of the strategy to manage culture and misconduct risk. Organizations across the globe are now seeing the value in auditing and evaluating their corporate culture to manage risk. This is even more important as we continue to adapt to the “new normal”.

The economic crisis caused by the Covid-19 pandemic has placed extraordinary demands upon banks worldwide. Necessary work-from-home orders have effectively eviscerated banks’ ‘First Line of Defence,’ while regulators have suspended many of their usual supervisory activities. In this, the pandemic has served to highlight the industry’s Achilles Heel: poor nonfinancial risk management and, particularly, the management of misconduct risk.

An absence of evidence is not evidence of absence. Banks are increasingly expected to develop leading indicators of risk to permit proactive mitigation efforts. Regtech companies are bringing such capabilities to market and leading institutions will be early adopters.  Different Asian financial centers appear now to be vying to host the heart of the region’s Regtech ecosystem, with the innovation and jobs such a move may represent.

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Starling advisors Gary Cohn, Mark Cooke, and CEO Stephen Scott feature in Fortune

Starling Team

Over the last decade, the financial industry was subject to increased regulatory scrutiny and public scorn triggered by misconduct scandals. During the coronavirus shutdown, however, banks have been critical partners to policymakers struggling to prevent a full-blown depression. Amidst such efforts, regulatory supervision has been partly suspended, to allow the industry to focus on the provision of economic relief.

However, lighter supervision might result in a heightened conduct risk. It is highly likely that increases in opportunistic crime will be spurred by economic anxiety. With many working remotely, outside the scope of standard internal risk controls and systems, things could turn sour quickly. Banks must therefore exercise added vigilance if they are to avoid future scandal and regulator wrath.

A rules-based approach to risk and compliance governance has failed to prevent misconduct in the past, and such an approach is to be avoided now. Firms have not done well in anticipating misbehavior, in part because their leaders overweighted the impact of setting the right “tone at the top,” when it is actually the “echo from the bottom” that matters more. Now, what is called for are principles-based policies aimed at encouraging responsible corporate cultures.

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Institutional Innovation Report | Aspen Digital

Starling Team
Aspen Digital recently released a new report, Redefining the Workscape Bringing Value and Values to Machine-Human Collaboration.  The report summarizes a two-day Roundtable discussion in which Starling founder & CEO Stephen Scott participated last summer. It features discussions on the future of work, with a focus on business structures and leadership strategies that can help organizations leverage the opportunities presented by new technologies.

As Stephen emphasized during the Aspen Roundtable discussion, “networks of trust” within an organization work to cultivate a sense of belonging and community, to foster camaraderie and collaboration, and to engage people in a shared sense of purpose and a common corporate culture.  Such trust networks are an over-looked and critical company asset.

Rather than the current reliance upon complex technology-based risk management systems that operate at multiple “layers of defense” across broad geographies and distributed teams, Starling emphasizes that behavioral science, organizational network analytics and machine learning combine to allow managers to map and measure the “social capital” at work in their firms, and to harness that to serve improved performance and risk management goals.

To learn more about these and other ideas explored by the distinguished Aspen Digital Roundtable participants, download the full report here.
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Available Now: Starling’s 2020 Compendium!

Starling Team

Starling’s 2020 Compendium is available now! This annual report on regulatory activities and priorities regarding Culture and Conduct Supervision in the Banking Sector has become an industry “must-read” and a platform through which the industry addresses itself on this important topic.

The report is packed with contributions from among our global audience of central bankers, bank regulators and supervisors, international standard-setters and prominent industry figures worldwide, as well as commentary from our prestigious advisory team. Get your copy now!

Download the 2020 Compendium here

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