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Analysis of risk and regulation

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Centre for Analysis of Risk and Regulation
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



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.
Special issue on the British Utility Regulation Model in Utilities Policy. Based on papers that were presented at the March 2014 conference organised by CARR, this set of papers looks at the utility regulation experience in comparative perspective. The articles can be accessed here|.

New Risk & Regulation Issue 28: Winter 2014|

Regulation in Crisis is the key theme of the latest edition of risk & regulation, CARR’s biannual magazine. Topics include organizational risk management, utility regulation, policy foresightedness, existential risk, governance innovation, climate change, sustainability, and social organizations.

The co-edited book ‘Problem-Solving Capacity of the Modern State’| by Martin Lodge| and Kai Wegrich| has just been published by Oxford University Press. The volume highlights the demands on governance that arise from contemporary challenges, such as demographic, environmental and financial challenges. It builds on CARR’s recent roundtable discussion| on civil service capacities. 
News archive|

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|.

Press 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)





Lighthill Risk Network|

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

Theme: Inspection and ComplianceWhat 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.|





Forum 2

Theme: 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.|



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|