An obligation and an opportunity

“Strong regulation and supervision cannot substitute for deficiencies in bank culture.”

– William Dudley, President and CEO, New York Federal Reserve

 

We know that we can’t, and shouldn’t, have rules for everything.

We also know that internal controls send the message that we don’t trust our colleagues.

Of course, both are necessary but insufficient to address all organizational risks.

What’s left is an obligation for the ethical leader to create an ethical culture, to fill the gaps between rules and between controls.

It’s an obligation because the necessary power rests with leadership. Yet, too many leaders behave as if creating a good culture is optional.

Regulators don’t think it’s optional. Soon, failures to exercise this power will be seen as neglect. As negligence.

We all know where this is heading. One day, creating a good culture will be an organization’s first priority.

Why not take this obligation seriously now? Those who do it first will have a competitive advantage.

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