On the whole, however, we can say, according to our estimates, banks are in good shape. There is a recorded profit, that has continued into this year. One of the factors for it is the increased lending, business growth, profitable business, and lower reserves. This is despite our easing, and we carried our easing on reserves, and expected that in 2021 we would see an increase in the demand for the creation of such reserves. But firstly, not all banks made use of the easing. This brought about a sense of comfort that such easing could be used, but banks took a very responsible approach to creating reserves last year. A lot of banks created reserves. And secondly, we can see that the economy is recovering, and even the level of default that banks expected is now lower. Let’s hope that the economy will continue to develop. But profit itself is a source of further capital growth, a further growth in lending. This is also a positive factor. I would like to touch on in a little more detail the steps we will take in terms of regulation in order, on the one hand, to preserve the stability of the banking system, and, on the other hand, to stimulate the flow of resources into the economy. We now consider it important to pay special attention to the risks banks and their clients face because a “recovering” economy after a pandemic may be more sensitive to these risks than one in calm times.
Behavioral risk refers to behaviors within an organization that could potentially lead to negative business outcomes.3 In such organizations, behavioral risk is not effectively mitigated or even considered, and the stated values of the firm are not reflected in the actions and norms of the organization’s members. Group think is prevalent and employees do not speak freely, or are ignored, when they have concerns about the way their group is doing business. The letter of the law may be followed but not the spirit, with illegal activities only coming to light when discovered by authorities. “Conduct” is viewed as something that is only the responsibility of the compliance department through a set of rules and controls. The outcomes stemming from high behavioral 1/5  BIS central bankers' speeches  risk reduce cultural capital, damage the firm and the trustworthiness of the industry over time. In an organization with a high level of cultural capital, on the other hand, behavioral risk is low. Employees refrain from taking excessive risks and they are unafraid of – and rewarded for – raising issues up the management chain. When they speak up, they believe the organization will take them seriously with meaningful responses. The organization recognizes and rewards employees who understand and internalize the expectations of laws and regulations, and do not view compliance as a checklist. In organizations with a high level of cultural capital, an important factor in advancing to senior leadership is role-modeling behavior consistent with a firm’s values, assumptions and behavioral norms.