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PBA® for Soft Controls

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Across the globe, regulators are increasing the focus on conduct risks

 Why 

 

The term "soft controls" refers to the intangible, informal levers of controls such as corporate culture and the organization's tone at the top.

 

Internal auditors consider soft controls to be among the greatest challenges our profession has ever faced. Across the globe, supervisors are increasing their focus on conduct risks. The question "shall we audit soft controls?" has been replaced by "how to best audit soft controls?". ​

 

  • "Supervisors are increasing the focus on decision-making practices and behavior as a core aspect of Governance." Federal Reserve Bank of New York, "Misconduct Risk, Culture, and Supervision", 2017

  • "Conduct risk' has entered the lexicon of bank Boards and regulators as a clear and present danger." Australian Prudential Regulation Authority APRA, "Prudential Inquiry Into the Commonwealth Bank of Australia" final report, 2018

  • "In a few years’ time, De Nederlandsche Bank increased its supervisory staff with colleagues specialised in assessing behaviour and culture." Supervision of Behaviour and Culture, De Nederlandsche Bank, 2015

  • "All the soft controls in an organization together constitute its corporate culture. The corporate culture is the most powerful control in any organization." James Roth, Best Practices: Evaluating the Corporate Culture, 2011

 How 

PBA® decomposes the soft control into its assessable, function analytical components that can be compared and contrasted with the desired thinking and behavior patterns.

 

"If you were at a party, the soft controls would be like cocktails that are made up of different ingredients. Similarly, tangible soft control evaluations require decomposing the control into its function analytical components, the cocktail's raw ingredients, that can be assessed."

Barbara Siegenthaler, Founder and Chief Innovation Officer of Savanteon LLC, 2019

PBA®

  • Provides fine-grained evaluation insights into the so-called "soft" controls

  • Provides sufficient, reliable, relevant, and useful information regarding soft controls, as required by IPPF 2310 Identifying Information

 

More about the PBA® methodology.​​​

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