Following the financial crisis and a series of mis-selling and 'rigging' scandals in the financial services, organisational culture, and particularly the risk culture of organisations, has come to be regarded as a key issue for both financial firms and their regulators This paper considers the extent to which regulatory published notices, 'Final Notices' (FNs), relating to breaches of the regulatory Handbook, are able to provide lessons, or pointers, in the development of 'appropriate' cultures. By undertaking a qualitative content analysis of all the FNs in 2012, we examine the extent to which FNs draw attention to issues of culture, and to the regulator's analysis of the drivers of culture published as part of its treating customers fairly (TCF) initiative. The analysis finds that, although not easy to extract, there are important learning points in FNs relating to organisational culture, and in particular to the factors driving behaviours and outcomes that are signs of poor culture. This paper suggests that, whilst it may not be for a regulator to dictate firms' culture, it could do much more to make use of the content of FNs as a learning tool for firms; particularly in the context of its cultural framework for TCF. This would support the 'outcomes-based' approach being espoused by the UK's regulators.Keywords: risk culture; Final Notice; treating customers fairly; content analysis; Financial Conduct Authority The crisis exposed significant shortcomings in the governance and risk management of firms and the culture and ethics which underpin them. (Sants 2012a) Introduction Organisational culture in financial services firms has become an important issue for the UK's regulator (Sants 2010a;2010b, Wheatley 2012a as well as the firms themselves (Salz 2013). In the wake of the financial crisis, significant academic attention has also been paid to risk culture within financial organisations (Ashby, Palermo, and Power 2012; FSA 2012a;McConnell 2014). Given the behaviour of 'rogue' individuals, the inadequacies of large organisations such as RBS and HSBC, and the failings of an industry as a whole as evidenced by scandals such as PPI and LIBOR (Bryce, Cheevers, and Webb 2013), it is increasingly argued that, for financial firms, Journal of Risk Research, 2016 Vol. 19, No. 3, 364-387, http://dx.doi.org/10.1080/13669877.2014 an appropriate risk culture is a key element of an appropriate firm culture; that is, the acceptability of '"doing what we do" in the ordinary course of business' (IIF 2009, AIII2).Ashby , Palermo, and Power draw attention to an increasing expansion, since the financial crisis, in the use of the term 'risk culture' in the news, and by professional bodies and consultancy firms (2012, 19). For example, in KPMG's 2008 global survey on risk management in banks, which covered over 400 professionals involved in risk management in 79 countries, it was found that 77% of participants were dedicated to establishing a more effective risk culture, with 48% citing risk culture as the element of risk manageme...

Operational risk announcements are unexpected adverse media news that potentially harm the reputation of financial institutions. This paper examines the equity-based and debt-based reputational effects of financial sentiment tones in operational risk announcements and shows how such reputational effects are moderated by alternative sources of public information. Our analysis reveals that the net negative tone and litigious tone have adverse reputational effects, and the uncertainty tone mitigates the adverse reputational impact. Additionally, alternative, simultaneous sources of information neutralize the reputational effects of textual tones. First, third-party information about the event (i.e. regulatory announcements and final settlements) dissolves the favorable (adverse) reputational impact of the uncertainty tone (litigious tone). Second, loss amount disclosure and firm recognition substitute the reputational effects of the net negative tone and uncertainty tone only in Anglo-Saxon countries and market-based economies. Overall, our findings indicate that the reputational effects of the media materialize most when there is lack of certain, quantifiable and regulated public information about the operational risk event.

This paper presents an analysis of Loan Loss Provisioning (LLP) behavior of European banks across 26-member states to determine how bad management and Technological Innovative Progress (TIP) has affected bank risk management. Technological improvements in banking have seen advances in both back and front office operations with respect to lending. This is created through increased disembodied technological change capturing improvements in both non-financial and risk management technologies. We find, using a new dynamic LLP model that European banks employed bad management practices in relation to their lending and monitoring practices, leading to higher losses on loans (through increased LLPs). However, the relationship between TIP and LLPs indicates that those banks which increased their technological efficiency with respect to costs had a greater ability to recognize bad loans, and were therefore able to subsequently increase LLPs. That is, improving technology mitigated the impact of bad management practices in European banks.

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This paper investigates loan loss provisioning (LLP) behaviour by Vietnamese banks during the period 2006-2012. We test the capital, income-smoothing and cyclical management hypotheses and examine whether the inclusion of X-efficiencies and/or risk control variables influences provisioning behaviour. When the X-efficiency estimates are incorporated into the models, Vietnamese banks do not exhibit counter-cyclical or capital management manipulation by managers, but counter cyclical income smoothing. Yet, the inclusion of risk control variables in x-efficiency scores (either equity or reserves for impaired loans) supports the addition of capital management hypotheses.JEL Classification: C33: G01: G28: G21