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Behaviour and culture in the financial sector

Board members of financial institutions such as banks, insurers and pension funds make many decisions on a daily basis. The institutions’ corporate culture and their own personal behaviour play an important role in those decisions. This means behaviour and culture affect the institutions’ results.

Behaviour and culture affect results

Behaviour is what we demonstrate, how we act and how we communicate. But why do we behave the way we do? Our behaviour is driven, among other things, by our personal motivations, beliefs and values, and by how we deal with each other as part of a group. Our behaviour also affects that of others. Board members should be aware of this, as they are the ones who run the organisation and are seen as role models. They must therefore act carefully and demonstrate responsible behaviour. This is because behaviour and culture largely determine the results of a financial institution.

Example of good relations in an open culture

In an open culture, board members tell each other about their own actions on a regular basis, discussing specific examples from everyday practice. For instance, they tell each other how and why they made certain decisions. This makes them more aware of their fellow board members’ tasks, what they believe is important and in what respects their opinions differ. By openly discussing these matters collectively, they will find it easier to be honest with each other and hold each other to account. This will allow them to work more pleasantly as a team and contribute to an open culture.

Example of poor relations in a closed culture

Board members who are not open to criticism and do not ask for or accept feedback create a closed culture. In a closed culture, there will not be much room for divergent opinions, and not all available expertise might be put to good use. This could impair the quality of board members’ decision-making. Let's look at another example. If board members do not get along well and annoy each other, they will typically be less inclined to trust each other. Mutual trust is of vital importance, as board members should always ask each other questions and be engaged in a continuing dialogue. This benefits the quality of their decision-making.

Supervision of governance, behaviour and culture

The behaviour of individual board members and the financial institution's culture therefore affect the institution's results. Whenever we observe risky behaviour and an unhealthy culture in good time, we can press for adjustment. In this way, we help reduce or prevent future problems. A financial institution's results are also affected by its governance. This is the way an organisation is managed and structured. This is why De Nederlandsche Bank (DNB) supervises governance, behaviour and culture.

Supervision of governance, behaviour and culture