2025 Culture & Conduct Risk in the Financial Sector: Why it matters and what the industry is doing to address it

Starling's 2025 Compendium describes a "crisis of trust" in core institutions globally and argues that this is undermining faith in capitalism and democracy. Addressing this will require a fundamental rethinking of culture risk governance and supervision, the report argues. Sub-titled "Culture & Conduct Risk in the Financial Sector" and now in its eighth year, the Starling Compendium has become an industry must-read publication, featuring insights contributed by dozens of global leaders, updates on regulatory trends witnessed in the past year among major global financial centers, and Starling's own industry-leading research and analysis. Drawing a powerful analogy to the 19th-century scientific revolution, the report posits that today's leaders are in a position similar to that of pre-modern physicians confronting invisible pathogens. Breakthroughs by innovators like Louis Pasteur were not merely scientific, but narrative; in Pasteur's telling, the unseen enemy - 'le microbe' - was rendered visible and thus treatable. The Compendium argues that a similar breakthrough is now needed to make invisible yet decisive forces of organizational culture subject to proactive risk management. The report assembles a sweeping body of evidence demonstrating a systemic decline in public trust. Many of the Compendium's contributors diagnose the problem as a failure of governance and supervision. Surveying across leading jurisdictions, the 2025 Compendium documents how the pendulum is swinging decisively toward prioritizing economic growth and competitiveness, fueling a powerful argument for deregulation. The Compendium argues for a paradigm shift, moving beyond blaming "bad apples" to focus on "barrels" - the cultural environments that shape behavior. To make this architecture visible, the report points to the transformative potential of AI and computational social science, with attendant opportunity and risk. In Closing Comments to the report, Tiff Macklem, Governor of the Bank of Canada and Chair of the Group of Governors and Heads of Supervision that sets international standards, argues that the drive for growth through deregulation is not merely a technical adjustment but a high-stakes gamble that will determine the enduring legitimacy of supervisory institutions. Ultimately, the 2025 Compendium calls for a new model of culture risk governance and supervision. Instead of reactive enforcement, this new model would be grounded in foresight.