Finance executives are taking risk personally, and they are turning away from some business opportunities they think are too risky, according to Thomson Reuters Regulatory Intelligence’s fourth annual global Conduct Risk survey.

It found that nearly a third (29%) of financial executives say their firms have declined potentially profitable business opportunities due to culture and/or conduct risk concerns, compared with 37% of respondents at global systemically important financial institutions (G-SIFIs).  The G-SIFIs are ahead in most culture/conduct categories because they have been working at it longer, the report suggests.

Concern by financial executives about the risks of personal liability appears to be affecting the strategic business decisions they make, concluded the Thomson Reuters survey report. It suggested that increased actions by regulators worldwide are beginning to change behaviors of decision makers at banks, brokerage and asset management firms and insurance companies.

“The frank concerns and views shared by participants reinforce challenges their peers face in all financial services sectors,” said Stacey English, head of regulatory intelligence at Thomson Reuters and a co-author of the report. “Neither culture nor conduct risk are new concepts but this year’s survey emphasizes how both remain at the top of firms’ and regulator priorities, directly impacting strategy as they face greater prospects of personal liability.”

The biggest firms have been working on conduct and culture for a long time, said English. Progress appears mixed in the survey partly because cultural conduct is difficult to define and implement — it is very qualitative.

“Regulators have never defined it and they won’t define it,” she said.

The report said that: “There seems to be a widespread regulatory recognition that, while cultural change is the overriding objective of financial regulation, it cannot be changed by regulatory fiat…Regulators have chosen not to define the term ‘conduct risk’, preferring instead that firms should do so in a way that is meaningful to their businesses.”

Most executives (87%) at G-SIFIs agreed that continued focus on culture and conduct risk will increase personal liability, compared with 73% at other firms. The disparity is potentially the result of a lack of consistent definition for culture and conduct risk.

Once again, respondents ranked culture, ethics and integrity (59%) as their top three concerns of conduct risk, followed by corporate governance and tone from the top (52%), and conflicts of interest (49%).

The biggest challenge for financial institutions, English added, is the pace of regulatory change — a four-fold increase in the last four years, plus political uncertainty with Brexit and the election of President Donald Trump.

Financial institutions need compliance monitoring, internal monitoring, complaints analysis and awareness of what their customers and staff are saying. In a field as difficult to define as conduct and culture, it’s probably inevitable that a report based on a survey will seem a bit nebulous.

For example, the report includes selections from some annual reports.

Wells Fargo, 2015: “Our risk culture also seeks to foster an environment that encourages and promotes robust communication and cooperation among the Company’s three lines of defense.”

Statements of values are not enough

John Stumpf, chairman and CEO at Wells, resigned in October over a long-running bank practice of opening accounts for people without their permission. The board required him to forfeit $41 million in unvested equity. Oh well, so much for risk culture.

Barclays, 2015: Conduct risk: Detriment through inappropriate judgment in execution of business activities. Its CEO, Jes Staley, is facing disciplinary action for trying to discover the identity of a whistleblower, twice.

The survey said that responsibility for compliance has shifted from the board to compliance teams at many firms. The compliance teams own the policy and implementation, but at the same time responsibility has to be at the very top, the report concludes.

“Culture in particular has become the holy grail this year as regulators recognize that all good things, in behavioral terms, flow from getting culture right,” according to the report.