Supervision of governance, behaviour and culture

Pressing for adjustment before risks arise

From experience we know that poor financial results are often caused by risky behaviour and sometimes even unethical behaviour. Supervising governance, behaviour and culture allows us to detect risky behaviour at an early stage. It therefore enables us to press for adjustment before risks arise or manifest themselves. In this way we reduce and prevent future problems. As each financial institution is different, its governance, behaviour and culture vary from one institution to another. So we do not prescribe a one-size-fits-all governance, behaviour or culture.

How do we supervise behaviour and culture?

When supervising behaviour and culture, we look at the board's decision-making, leadership and communications. We ask ourselves whether the way in which these take place contributes to the institution’s objectives or creates undue risks. To answer that question we investigate group dynamics, behaviour patterns and mindset. Group dynamics looks at how people interact in a group setting, such as as on a management or supervisory board. Can everyone make themselves heard? And does everyone realise how their own behaviour can affect the functioning of the group as a whole? Mindset consists of deep-seated beliefs and values. These are typically perceived as self-evident truths.

What is governance?

In addition to monitoring behaviour and culture, we also supervise governance. The way a financial institution is managed and structured affects individual behaviour, but the reverse also applies – the behaviour of board members also affects the way an institution is organised. Governance encompasses the following aspects:

• Legal structure, such as a public or private limited liability company, a foundation or a cooperative
• Organisational structure, as shown in an organisation chart
• Corporate governance, which is the division of tasks and roles between the management board, the supervisory board and the shareholders
• Collaboration between the various departments, such as between the commercial division and internal control departments like risk management, compliance and internal audit
• All internal processes, procedures and policies
• The way board members and managers fulfil their management duties

Good governance ensures that board members can manage a financial institution in a sound and ethical way. Central aspects include careful consideration of the interests of all stakeholders in making decisions and complying with laws and regulations.

Downloads and links

• Only in Dutch - Article “The Next Step” in: Tijdschrift voor Compliance (2018)
• Book Supervision of Behaviour and Culture (2015)
• Brochure Leading by example (2013)