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Centre for Analysis of Risk and Regulation
3rd Floor 20 Kingsway
London School of Economics and Political Science
Houghton Street
United Kingdom


Email: risk@lse.ac.uk
Tel: + 44 (0) 20 7955 6577
Fax: + 44 (0) 20 7242 3912

CARR - Analysis of Risk and Regulation


The Centre for Analysis of Risk and Regulation (CARR) is an interdisciplinary research centre whose core intellectual work focuses on the organisational and institutional settings for risk management and regulatory practices.

All media enquiries should be directed through the CARR Administration Office.  Please contact us.

Mike Power CARR
Professor Michael Power among four LSE elected as Fellows of the prestigious British Academy

Congratulations to Mike Power. Former CARR director, Professor Mike Power has been made a Fellow of the British Academy, the first accounting academic to be elected to a fellowship. Many congratulations! Further information can be found here
The Governance Trap

CARR and Solvency II Wire collaborated on a joint workshop on the ‘Governance Trap’  – a discussion among ten regulators from different sectors about the role of principles of good governance in contemporary regulation.  Further information and contributions from participants can be found here
New CARR Discussion Paper 83: Innovation through customer engagement and negotiated settlements in water regulation Towards a transformed regulatory state?

Across economic sectors, contemporary regulation is said to be characterised by two essential dimensions, the centrality of regulatory agencies in price-setting, and the use of the RPI-X formula to incentivise regulated companies. These dimensions have also come to play important roles in the regulation of water. This paper considers ox`ne major shift in the regulatory approach to the governance of water, namely, the move towards customer engagement in price-setting in England and Wales, as well as Scotland. By drawing on original interviews and documentary analyses, the paper demonstrates that this delegation of regulatory responsibilities to customer bodies can be explained by policy disappointment and policy entrepreneurs. It also questions whether these developments represent a transformation of the regulatory orthodoxy of the past three decades. The paper finds that despite appearances of customer engagement processes, regulators continued to play a pivotal role in price-setting in both jurisdictions.
CARR Project receives ESRC funding under the prestigious Open Research Area award scheme

Dr Andrea Mennicken and Prof Martin Lodge have been awarded a prestigious grant of £591,000 by the Economic and Social Research Council under the “Open Research Area (ORA) for the Social Sciences” programme to study relations between

Quantification, Administrative Capacity and Democracy (QUAD).

This project is being conducted in collaboration with the Centre de Sociologie de l’Innovation at Mines ParisTech (France), the Faculty of Sociology at Bielefeld University (Germany), the Department of Management Accounting and Control at Helmut-Schmidt University Hamburg (Germany) and the Institute of Political Science at Leiden University (Netherlands).

The three year research project is supported by more than €1.9million in research grant funding awarded through the “Open Research Area (ORA) for the Social Sciences” programme by the Agence Nationale de la Recherche (ANR, France), Deutsche Forschungsgemeinschaft (DFG, Germany), the Economic and Social Research Council (ESRC, UK) and the Nederlands Organisatie voor Wetenschappelijk Onderzoek (NWO, Netherlands).

More details about the project can be obtained here.
Diversity Makes You Brighter

David Stark, Centennial Professor at LSE (CARR and Department of Sociology) and Arthur Lehman Professor of Sociology and International Affairs at Columbia University, published results from his research on  ethnic diversity and price bubbles in The New York Times on 9 December 2015.
OECD Regulatory Policy Outlook 2015
CARR research in OECD Regulatory Policy Outlook 2015

The latest OECD Regulatory Policy Outlook has been influenced by CARR research on regulatory policy, risk-based regulation and 'red tape reduction'. CARR Director Martin Lodge contributed a chapter to the background volume to the Report.



Risk Culture in Financial Organisations

Although there is widespread consensus that problems of ‘risk culture’ contributed to the financial crisis there is less agreement on what ‘risk culture’ actually is and how it might be managed by financial institutions. 

This project intends to increase our understanding of ‘risk culture’ and effect a knowledge transfer from academia to business by focusing on the ‘cultural drivers’ (e.g. the rate of expansion in operations, approaches to oversight and assurance, level of employee discretion and the framing of risk) which influence the risk taking and control activities of banks and other financial institutions (BOFIs). The intention is not to presume what a ‘good risk culture’ looks like but to investigate the often competing aspects of organisational culture which can drive both risk taking and its mitigation.  We aim for collective knowledge production – working together with CROs and other relevant actors to arrive at a shared view of the cultural factors that drive risk taking and avoiding within BOFIs.

The objectives of the project are as follows:

  • To provide a bottom-up view of risk culture, analysing in a practical way the ‘cultural drivers’ in the cultures of BOFIs which are risk-relevant.
  • To benchmark results obtained from a representative sample of organisations, providing an overview of common themes, unique aspects and areas of disagreement in the characteristics of BOFI risk cultures.
  • To develop a useable ‘risk culture instrument’ that can be used by CROs and others to manage their institutions’ risk cultures in a more explicit manner.

The report was published on 8 November 2012. To read the full report, please click here.  


Please click here to read the ESRC article titled "Researching risk in financial organisations" from 5 December 2012.


Risk Culture in Financial Organisations Project have published a Thinkpiece for CII on 20 May 2013. To read the Thinkpiece, please click here.


Final-Risk-Culture-ReportPress release - Risk Culture in Financial Organisations publish final report: 30 September 2013

Joint research from LSE (Professor Mike Power and Dr Tommaso Palermo) and Plymouth University (Dr Simon Ashby) published today dispels ‘myths’ that poor or deviant risk culture in financial institutions is mainly responsible for recent scandals.

The report, Risk Culture in Financial Organisations, says that current debates misleadingly equate risk culture with greater precaution and risk aversion. It challenges the notion that there is a clear distinction between ‘strong’ and ‘weak’ risk cultures.

Professor Mike Power comments, “The risk cultures of financial organisations are full of trade-offs, and how they manage those trade-offs is fundamental. This clearly includes, but is not restricted to, the need to balance risk and return. In addition, we find that ‘good’ risk culture is as much about organisational clarity and confidence in making these trade-offs, as it is about the level of risk taken as such, or indeed about ethics.”

The report also questions the direction of certain financial sector reforms, including the significant focus on issues such as governance, ethics and incentives.

To read the full press release, please click here.

To final report is available here and the Executive Summary is available here.    

Project Leaders

Professor Mike Power (LSE)


Dr Simon Ashby (Plymouth Business School)


Dr Tommaso Palermo (LSE)

Sponsors logos - CIMA, ESRC, CII, LRN

The Regulators’ Forum is a unique initiative to bring together academics and practitioners in the field of regulation to share insights and lessons regarding contemporary regulatory challenges. Contemporary regulation often takes places within distinct policy domains, with little opportunity to draw on cross-sectoral experiences. CARR’s Regulators’ Forum, supported by LSE’s Knowledge Exchange initiative, seeks to provide for a setting for structured themes about key themes in regulation.


Forum 1 Inspection and Compliance

What are the challenges of risk-based and responsive enforcement strategies? How do different regulators deal with these challenges, how do they combine different inspection strategies, and what is the impact of austerity on enforcement practices? These were the themes of the first meeting of the Regulators' Forum.

Discussion summary Inspection and Compliance 

Forum 2 Emerging Risks

How problematic are emerging risks for regulators? How can they be identified and communicated? How can emerging risks be incorporated in the day-to-day practices? These were the key questions considered during the meeting of the Regulators’ Forum.

Discussion summary Emerging Risks 

Forum 3 Regulatory Performance

How difficult is it for regulators to manage and measure performance? This challenge has become increasingly pertinent as regulators are said to be under growing pressure to account for and justify their performance. What is the purpose of performance management? What are the ways in which performance is being measured? And how can behaviour distortions be avoided? This meeting of the Regulators’ Forum addressed these questions.

Discussion summary Regulatory Performance 

Forum 4 Managing Regulatory Failure

What are seen as regulatory failures? What are different types and causes for regulatory failure? And how can regulators manage failure, both in the short-term and the long-term? These were the questions that featured in this meeting of the Regulators’ Forum. It highlighted the various causes for failure, as well as the problems of managing a crisis in view of dispersed responsibilities.

Discussion summary Managing Regulatory Failure

Forum 5 Transboundary Regulation

How do regulators deal with cross-jurisdictional issues? How do they adjust to the demands stemming from different national approaches, whether in the context of UK-devolution or relationship with local authorities, EU membership or wider international commitments? How can regulators remain informed about wider developments? How can they influence other regulators’ activities and how can issues of co-ordination be addressed, for example, in terms of information exchange, consistency in decision-making, or in ensuring that responsibilities are clearly assigned?

Discussion summary Transboundary Regulation

Forum 6 Engaging with Stakeholders

One key claim is that participation enhances both the quality of regulatory decision-making and the legitimacy of regulatory decisions. How to ensure such participatory processes has proven far more difficult. There are issues about the timing of stakeholder engagement, about different rationales for engagement, about who the most relevant stakeholders are, about the appropriate technologies and venues for engagement, as well as about the extent to which regulators should be responsive to stakeholders’ perspectives. 

Discussion summary Engaging with Stakeholders


Forum 7 Assessment Tools for Regulators

How can regulators evaluate their performance? What are the questions that tools to guide evaluation exercises should ask? Is it even possible to develop a toolkit to support strategic and operational decision-making?

Discussion summary Assessment Tools for Regulators

Forum 8 Value for Money in Regulation

What represents ‘value for money’ in regulation?. In an age, where regulators have to justify their activities and, in some cases, their overall existence, there have been increased calls for highlighting the ‘value for money’ of regulation. While ‘value for money’ is a well-established term, it raises particularly tricky issues for regulation, whether in terms of methodology, information, or attribution.

Discussion summary Value for Money in Regulation

Forum 9 Regulation and Innovation

How can regulators encourage innovation? Several regulators are required, by statutory objective, to promote competition and, in the UK, there will be an obligation for all regulators to promote economic growth. So how can regulatory agencies ensure that innovation enhances competition and consumer choice without being seen to ‘pick winners’ and risking the downgrading of regulatory standards?

Discussion summary Regulation and Innovation

Forum 10 Codes of Conduct

Codes of conduct fulful many purposes – they are therefore central to many regulatory domains. This meeting of the Regulators’ Forum considered the different rationales for a code of conduct, the basis on which codes could be established, and how and when codes could be reviewed and updated.

Discussion summary Codes of Conduct

Forum 11 Behavioural Insights

'Behavioural insights’ has become the latest policy boom across governments. Among the many calls for ‘more’ behavioural insights and the attraction of ‘Nudge’-type thinking in regulation, less is known about how behavioural insights inform regulatory practice. In this session, the discussion focused on the experience with, limitations of and opposition towards behavioural insights. 

Discussion summary Behavioural Insights

Forum 12 Calibrating Enforcement

Professional regulators are faced with the continuous challenges of achieving a degree of consistency in decision-making and of ensuring that regulatory objectives are re- assessed in the light of public expectations and professional norms. This requires an engagement of both public and professional views that builds on new forms of communication to establish what contemporary ideas about appropriate professional conduct might be.

Discussion summary Calibrating Enforcement

Forum 13 Predicting Quality Failure

What strategies exist to predict failure? What does the experience with existing methods of predicting quality failure tell us? This session of the Regulators’ Forum focused on the experiences in higher education in particular, allowing for comparison with other regulated sectors. Existing findings place the future of a ‘data-driven’ world of quality failure prediction into a critical light.

Discussion summary Predicting Quality Failure