The message and corresponding conduct should empower line staff to elevate ethical or reputational concerns to appropriate levels of management without fear of retribution. Reputational and legal risks pose major threats to financial services firms because the nature of their business requires maintaining the confidence of customers, creditors, and the general marketplace.
Importantly, legal and reputational risk can negatively affect the profitability, and ultimately the viability, of a financial firm. Enterprise-wide compliance program A strong compliance program is an integral part of the risk-management function. For the reasons I will discuss, the best practice in complex financial firms is to conduct risk management on an enterprisewide basis.