Incoming UK Financial Conduct Authority (FCA) chief warns of ‘hubris risk’ in firms’ culture. (2016)

“Hubris should be classed alongside credit and liquidity risks.

Jill Treanor
The Guardian>Regulators, Monday 9 May 2016.

Andrew Bailey (pictured), incoming chief executive of the UK’s Financial Conduct Authority (FCA), has said that … “hubris needs to be added to the list of risks City firms face.”

Giving his last speech as a deputy governor of the Bank of England before taking up his role at the FCA, Bailey pointed to the over-confidence of the management at major banks as a cause for the taxpayer bailouts and billion of pounds in fines for misconduct in recent years.

“We talk often about credit risk, market risk, liquidity risk, conduct risk in its several forms. You can add to that, hubris risk, the risk of blinding over-confidence …” Bailey told delegates at the City Week conference on Monday.

… “Culture has a major influence on the outcomes that matter to us as regulators. My assessment of recent history is that there has not been a case of a major prudential or conduct failing in a firm which did not have among its root causes a failure of culture as manifested in governance, remuneration, risk management or tone from the top.

“Culture has thus laid the ground for bad outcomes, for instance where management are so convinced of their rightness that they hurtle for the cliff without questioning the direction of travel.”

Access the full article here: Over-confidence is a still a risk in the City, says new FCA chief