Name: Don't forget your anecdotes: the rise of anecdata
Uploaded: 2024-10-09T18:07:24.380Z
Duration: 350.92
Description: Tom Hardin, owner of Tipper X Advisors, discusses the intersection of conduct and risk compliance. He explains how conduct is becoming more integrated with regulatory discussions and how it's essential to consider both data and qualitative aspects when assessing conduct risk.

RMA.INT.03 - Hardin_1.mp4

RMA.INT.03 - Hardin_1.vtt

English

{{00:00:04}}
Tom, thank you so much for joining
me today at RiskMinds Americas.

{{00:00:07}}
I know you're talking about
conducting clients a lot in your job.

{{00:00:11}}
But how is this community just
combining with the risk community?

{{00:00:15}}
What's the, what's the future of this?

{{00:00:17}}
Yeah, I've interesting perspective.

{{00:00:19}}
I, one of my first presentations
was in 2017 at RiskMinds.

{{00:00:22}}
And at that time, I think there
was more siloed isolation between

{{00:00:26}}
sort of this discussion about
risk compliance and conduct.

{{00:00:29}}
It was not, it was not clear who
owns what with the conduct space

{{00:00:33}}
because that's more qualitative.

{{00:00:35}}
Whereas compliance and risk, we
have our metrics, our KPIs or KRIs.

{{00:00:39}}
And conduct now is much more
of a discussion with the

{{00:00:42}}
regulators and the banks.

{{00:00:43}}
And there's more data around that.

{{00:00:46}}
But I think what we're seeing today
is there's still a big data focus

{{00:00:49}}
when you also have to get anecdotes.

{{00:00:51}}
Anecdotes from the frontline, what's going
on, what's happening, and combining it

{{00:00:55}}
together with data they call it anti data.

{{00:00:58}}
So looking at both, like you
can't just rely on the data, like

{{00:01:00}}
you might like with compliance.

{{00:01:01}}
You also have to look at the
anecdotes if you're trying to

{{00:01:03}}
figure out what the conduct is.

{{00:01:05}}
So that's important no
matter what your role is.

{{00:01:07}}
So to look at both.

{{00:01:08}}
Yeah.

{{00:01:09}}
So as you say, with regulatory
interest in  employee conduct,

{{00:01:14}}
how is this transition to.

{{00:01:16}}
to this data led approach happening
what's the future of that?

{{00:01:20}}
Yeah.

{{00:01:20}}
So I think there's much more.

{{00:01:21}}
So with, with compliance,
it's more legal focus.

{{00:01:23}}
Like, can we do something?

{{00:01:25}}
And conduct is more about
should we make this decision?

{{00:01:28}}
And again, it's harder to quantify.

{{00:01:30}}
But I think if you look at, there's
two types of ethics I talk about

{{00:01:33}}
when I do a training session, there's
normative ethics, which is what we're

{{00:01:36}}
taught in ethics class in university.

{{00:01:38}}
Like, is this the right
or wrong thing to do?

{{00:01:40}}
But there's also descriptive ethics, like.

{{00:01:42}}
How would our stakeholders look at this?

{{00:01:44}}
How would society look at
these decisions we're making?

{{00:01:47}}
And we're seeing more of a push there
to more of that descriptive ethics

{{00:01:50}}
when we're talking about conduct.

{{00:01:51}}
And again, it's qualitative.

{{00:01:53}}
So I, I, some of my clients have trouble
pitching their board on investing in

{{00:01:57}}
this and looking at this because if it's
qualitative, if we can't measure it, you

{{00:02:00}}
know, we're not going to go after it.

{{00:02:02}}
So I think we're on a good path with this,
but there's still a lot of work to do in

{{00:02:05}}
terms of getting our arms around like what
is the conduct risk in our organizations.

{{00:02:09}}
But if you think about it more
in terms of like, Should we do

{{00:02:12}}
something versus can we do something?

{{00:02:13}}
I think that helps a lot with
thinking about what is conduct risk.

{{00:02:16}}
Oh yeah, definitely.

{{00:02:17}}
So what is the, what is the missing
link here with leadership buy in then?

{{00:02:22}}
Yeah, I think you know, when, when I
present with boards, they're always

{{00:02:26}}
sort of metric focused and, you know,
committees and looking at the data.

{{00:02:30}}
When going back, not to repeat
myself, but just like looking

{{00:02:32}}
at the anecdotes and the data.

{{00:02:34}}
And I think boards just have to get
comfortable with that to help them

{{00:02:37}}
make decisions or invest in certain,
you know, vendors in terms of looking

{{00:02:42}}
at this more because regulators
are focused on it and regulators

{{00:02:44}}
are going to keep focusing on this.

{{00:02:46}}
I think it's just boards have
to get comfortable with not

{{00:02:49}}
everything's going to be there in
the data set for you to look at.

{{00:02:51}}
You have to have a little bit of both.

{{00:02:53}}
Yeah, yeah, of course.

{{00:02:55}}
But with trends moving towards
things like personal liability,

{{00:02:57}}
especially in the sustainable finance
area and green finance area, Yeah.

{{00:03:03}}
How can risk professionals and senior
leadership people prepare for that?

{{00:03:08}}
And what's, what's the solution?

{{00:03:09}}
Yeah.

{{00:03:10}}
And I think risk culture has evolved
too in the last seven years since

{{00:03:12}}
I'm presenting where now it's more
about, I look at risk cultures, like,

{{00:03:15}}
how do you, how do you manage risk?

{{00:03:17}}
Not the what, but how you're doing it.

{{00:03:20}}
So again, looking at
organizations are they too siloed?

{{00:03:23}}
Sometimes I'll present to a bank
and like risk is doing its own

{{00:03:26}}
thing and compliance is doing its
own thing and they're not talking.

{{00:03:28}}
So how siloed are you?

{{00:03:30}}
Are you talking to your other departments
and having sort of a cohesive view

{{00:03:34}}
of the business, of the risk culture?

{{00:03:37}}
I think about, there's organizational
culture we talk a lot about, which is

{{00:03:39}}
like, using a family analogy, the parents.

{{00:03:42}}
There's the conduct risk, which might be
the little brother who gets in trouble.

{{00:03:44}}
And then there's the risk culture,
which is the older sibling who's

{{00:03:47}}
trying to hold it both together.

{{00:03:49}}
So, I think it's important just
to not be in solid organizations.

{{00:03:53}}
Be talking to your counterparts
in the departments to get a handle

{{00:03:56}}
on like, what is the risk culture?

{{00:03:57}}
How do we make decisions?

{{00:03:59}}
How do we analyze our decision making?

{{00:04:00}}
Because decisions lead
to the conduct risk.

{{00:04:03}}
And if you just think good decisions
deliver good outcomes, that's not right.

{{00:04:07}}
Because good decisions
can deliver bad outcomes.

{{00:04:09}}
So look at your outcomes and
look at your decision making.

{{00:04:12}}
And you'll start to sort of predict what
the conduct risk, you know, might be.

{{00:04:16}}
And of course, coming up is
Risk Minds International, where

{{00:04:18}}
you'll be also presenting.

{{00:04:20}}
Where we also have a separate track
for conduct and compliance risk.

{{00:04:25}}
What themes do you expect
to come up in this?

{{00:04:27}}
So, yeah, it's interesting.

{{00:04:28}}
In Europe, I get a lot more
questions about this than the U.S.

{{00:04:30}}
Maybe it's just because the regulators
there, like the Financial Conduct

{{00:04:34}}
Authority in the U.K., was sort
of at the forefront of the conduct

{{00:04:36}}
discussion when I started speaking
seven, eight years ago, and the U.S.

{{00:04:39}}
regulators were sort of behind.

{{00:04:41}}
So I think there's going to be a lot
more focus on these types of questions.

{{00:04:45}}
You know, what are regulators looking for?

{{00:04:47}}
What do they expect?

{{00:04:48}}
I define culture today in my
presentation as the behaviors

{{00:04:52}}
employees believe will put them ahead.

{{00:04:54}}
So we often hear it's the tone at the top.

{{00:04:56}}
To me, it's not the tone.

{{00:04:57}}
The tone is just a signal.

{{00:04:58}}
It doesn't mean anything, but it's
actually do you understand the

{{00:05:01}}
behaviors that drive incentives
or the behaviors that employees

{{00:05:05}}
believe will put them ahead.

{{00:05:07}}
And the more people can do that within
the banks and the financial institutions,

{{00:05:10}}
I think the regulators will be not to
say that they would be happier, but at

{{00:05:13}}
least think you're on the right path.

{{00:05:15}}
So I think we'll have a really
robust discussion, maybe debate,

{{00:05:18}}
about how to look at that today.

{{00:05:19}}
And of course, it's all to do
with with You know, co working and

{{00:05:23}}
collaborating across all these places.

{{00:05:25}}
Yes, that's right.

{{00:05:27}}
Yeah, it all comes together that way.

{{00:05:29}}
Tom, thank you so much
for joining me today.

{{00:05:31}}
so much.

Tom, thank you so much for joining
me today at RiskMinds Americas.

I know you're talking about
conducting clients a lot in your job.

But how is this community just
combining with the risk community?

I, one of my first presentations
was in 2017 at RiskMinds.

And at that time, I think there
was more siloed isolation between

sort of this discussion about
risk compliance and conduct.

It was not, it was not clear who
owns what with the conduct space

Whereas compliance and risk, we
have our metrics, our KPIs or KRIs.

And conduct now is much more
of a discussion with the

But I think what we're seeing today
is there's still a big data focus

Anecdotes from the frontline, what's going
on, what's happening, and combining it

together with data they call it anti data.

So looking at both, like you
can't just rely on the data, like

You also have to look at the
anecdotes if you're trying to

So that's important no
matter what your role is.

So as you say, with regulatory
interest in  employee conduct,

to this data led approach happening
what's the future of that?

So with, with compliance,
it's more legal focus.

And conduct is more about
should we make this decision?

But I think if you look at, there's
two types of ethics I talk about

when I do a training session, there's
normative ethics, which is what we're

Like, is this the right
or wrong thing to do?

But there's also descriptive ethics, like.

How would society look at
these decisions we're making?

And we're seeing more of a push there
to more of that descriptive ethics

So I, I, some of my clients have trouble
pitching their board on investing in

this and looking at this because if it's
qualitative, if we can't measure it, you

So I think we're on a good path with this,
but there's still a lot of work to do in

terms of getting our arms around like what
is the conduct risk in our organizations.

But if you think about it more
in terms of like, Should we do

I think that helps a lot with
thinking about what is conduct risk.

So what is the, what is the missing
link here with leadership buy in then?

Yeah, I think you know, when, when I
present with boards, they're always

sort of metric focused and, you know,
committees and looking at the data.

When going back, not to repeat
myself, but just like looking

And I think boards just have to get
comfortable with that to help them

make decisions or invest in certain,
you know, vendors in terms of looking

at this more because regulators
are focused on it and regulators

I think it's just boards have
to get comfortable with not

everything's going to be there in
the data set for you to look at.

But with trends moving towards
things like personal liability,

especially in the sustainable finance
area and green finance area, Yeah.

How can risk professionals and senior
leadership people prepare for that?

And I think risk culture has evolved
too in the last seven years since

I'm presenting where now it's more
about, I look at risk cultures, like,

So again, looking at
organizations are they too siloed?

Sometimes I'll present to a bank
and like risk is doing its own

thing and compliance is doing its
own thing and they're not talking.

Are you talking to your other departments
and having sort of a cohesive view

I think about, there's organizational
culture we talk a lot about, which is

like, using a family analogy, the parents.

There's the conduct risk, which might be
the little brother who gets in trouble.

And then there's the risk culture,
which is the older sibling who's

So, I think it's important just
to not be in solid organizations.

Be talking to your counterparts
in the departments to get a handle

Because decisions lead
to the conduct risk.

And if you just think good decisions
deliver good outcomes, that's not right.

Because good decisions
can deliver bad outcomes.

So look at your outcomes and
look at your decision making.

And you'll start to sort of predict what
the conduct risk, you know, might be.

And of course, coming up is
Risk Minds International, where

Where we also have a separate track
for conduct and compliance risk.

What themes do you expect
to come up in this?

RiskMinds & QuantMinds

Expert Insight

Tom Hardin, owner of Tipper X Advisors, discusses the intersection of conduct and risk compliance. He explains how conduct is becoming more integrated with regulatory discussions and how it's essential to consider both data and qualitative aspects when assessing conduct risk. 