ERM Glossary: Conduct risk
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Conduct risk is the risk that a
firm’s conduct (e.g. how it interacts with its regulator, how it treats its
customers, how it organises itself) falls below what the regulator expects or
considers reasonable. More specifically, it tends to be associated with the
risk that the firm’s behaviour results in poor outcomes for its customers (i.e.
poorer than is reasonable from a regulatory perspective).
Some regulatory bodies, such as the UK’s Financial Conduct
Authority (FCA) are particularly focused on conduct risk, see e.g. FCA Business Plan
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