Coaching for risk culture in financial services can change how senior executives respond to bad news, what questions they ask and what they reward, but it cannot change incentives, escalation routes or decision rights on its own. Board members and CEOs who fund coaching to repair a conduct problem should therefore ask two questions: which executive behaviours are we changing, and which parts of the system will we change alongside them? Coaching without the second answer produces sharper executives inside the same broken design.
I work on leadership capability with executive teams, and financial services has a particular version of this problem. The consequences of weak judgement reach clients, controls, capital and reputation at once, so the pressure on senior behaviour is high. At the same time, much of what shapes behaviour sits in structures that a coach does not control: pay, targets, committees and the route a concern takes from a junior employee to a decision-maker. This article is about where coaching earns its place in that picture. For the general case on executive coaching in this sector, see executive leadership coaching for financial firms.
Coaching for risk culture and what the regulators say leaders influence
Two regulators put the leadership role in plain terms. The UK Financial Conduct Authority defines culture as the habitual behaviours and mindsets that characterise an organisation, and states that firms' cultures have been a major root cause of conduct failures. It focuses on four drivers of behaviour: purpose, leadership, the approach to rewarding and managing people, and governance. It adds that these are things firms can identify and manage.
The FCA's page on the Senior Managers and Certification Regime sets out three aims: encourage staff to take personal responsibility for their actions, improve conduct at all levels, and make sure firms and staff can show who does what. It also reports that a 2019 review found the regime often led to stronger tone and ownership by senior management. Accountability for named individuals puts pressure on exactly the behaviours a coach works with.
In Australia, the Australian Prudential Regulation Authority's 2016 information paper on risk culture, a snapshot of practice across banking, insurance and superannuation, makes a similar point. It reports that all institutions were clear on the central role of leadership in shaping risk culture, and that senior executives were almost universally acknowledged as one of the most powerful influences on it. It also notes that employees notice when stated values and actual behaviour diverge.
Read together, the two regulators give a coaching brief. The behaviour of senior leaders matters a great deal, staff watch what leaders do more than what they say, and the other drivers, rewards and governance, sit alongside leadership rather than beneath it.
What coaching can change in a senior financial services leader
Coaching works at the level of the individual's habits under pressure. Those habits are visible to the people who report to them, and they set the working rules for risk conversations long before any policy does.
- How the executive reacts when someone brings bad news, which teaches the team whether bad news is safe to bring.
- The questions they ask in credit, risk or product meetings, and whether those questions invite challenge or close it down.
- What they praise and what they let pass, particularly when a number is met by cutting a corner.
- How they speak about a breach or near miss: as a learning event, a threat to be contained, or a personal embarrassment.
- Whether they say what they do not know, and whether they invite the second line to say it before a decision rather than after.
A skilled coach can work on each of these with a leader in real situations: preparing for a difficult committee, debriefing a meeting that went badly, rehearsing how to respond to a challenge from a regulator or a board member. The evidence of change is observable by colleagues, and it is useful to agree in advance who will observe it and how.
What coaching cannot change on its own
The limits matter just as much. A coach cannot rewrite the incentive scheme, move a reporting line, clarify who can approve an exception or ensure a concern raised in one business line reaches the executive committee. If a leader is coached to welcome challenge but the escalation route still dead-ends, the leader will be admired for their openness and the culture will not move.
| Signal the executive sends | What staff conclude | Where coaching helps | What else must change |
|---|---|---|---|
| Ignores or rewards the number that hit target despite a control concern | Controls are optional when the number is good | Awareness of the signal; practice responding differently | Incentive design; performance review criteria |
| Reacts sharply to bad news | Bad news is unsafe to bring | Rehearsing a calmer response; asking for detail first | Clear escalation route with protection for those who use it |
| Decides alone in the meeting | Challenge is not wanted | Asking for dissent before deciding | Decision rights and committee terms of reference |
| Talks about values, behaves differently under pressure | Values are decoration | Naming the gap with the leader and tracking it | Consistent consequences for senior behaviour |
This table is the practical heart of the matter. It separates what a coach can do from what the executive team must do. I would ask for it to be completed before any budget is approved, with a named owner for the right-hand column. Where that column has no owner, the board should expect little change in the organisation, however well the coaching goes.
A design for coaching that connects to risk culture
Four parts of a coaching design aimed at risk culture
- 1. Named behaviours: Three to five behaviours per leader that colleagues can observe, linked to a stated business or conduct issue.
- 2. Observers: People who will see the behaviour in meetings and report on it, chosen with the leader and the sponsor.
- 3. System owner: An executive who owns the changes outside the coaching: incentives, escalation, decision rights.
- 4. Review points: Dates to compare what colleagues observed with what was intended, with the board seeing a summary.
- Name the issue: State the conduct, control or execution problem in a sentence. If it cannot be stated, the coaching is not ready.
- Choose the behaviours: Link each to the issue and write them so a colleague could confirm them.
- Brief the sponsor: The sponsor should know their role in observing, rewarding and removing obstacles.
- Fix the system in parallel: Assign owners for incentives, escalation and decision rights, with dates.
- Review at 90 days and again at nine months: Compare observed behaviour and system changes, then decide what to continue.
- Keep confidentiality sensible: Agree what the sponsor sees: themes and progress, not the content of private conversations.
The last item deserves care in a regulated setting. Leaders need a space in which they can say what they do not know. If everything said in coaching reaches the board, that space disappears. If nothing does, the board cannot judge value. The compromise I recommend is to share themes, the agreed behaviours and evidence of progress, and keep the content of conversations private.
Where coaching budgets for risk culture go wrong
Four mistakes recur. The first is funding coaching to avoid a harder decision, such as changing a pay structure or removing a leader. The second is treating the executive as the only variable, when the surrounding design is part of the problem. The third is measuring confidence rather than behaviour: leaders who feel more confident are not necessarily acting differently. The fourth is a lack of sponsor alignment, where the CEO, the chair and the head of risk each expect something different from the same engagement.
A related caution applies to the language of culture. It is easy for a boardroom to discuss culture in abstractions. The more useful discussion is specific: which meeting, which decision, which person, which behaviour. When you can answer those, coaching has something to work on. When you cannot, you are buying comfort. For the wider executive-team view, see how executive teams improve decision making and what culture-to-execution infrastructure means.
One practical habit helps in every case. Ask each coached leader to keep a short private log of three moments a month when the old reflex appeared and what they did instead. The log is theirs, and they choose what to share. It turns abstract intent into a record of real decisions, and it gives the coach and the leader something concrete to review. My view is that a written log beats memory here, because the pressure moments are exactly the ones that blur afterwards.
Reading the signals at nine months
Nine months is a fair point to judge, because behaviour needs a few cycles of real decisions to settle and the system changes need time to land. Ask colleagues, not the leader, what they now see. Do people bring concerns earlier? Do risk and control functions report being consulted before a decision, not informed afterwards? Have any escalations been raised through the new route, and what happened to the person who raised them? These are the questions that tell you whether a culture is moving, and they can be asked in a short, structured conversation with a sample of people at different levels.
Look also for the negative evidence. If a leader's colleagues describe the same behaviours as before, ask what stopped the change. Often the answer is outside the coaching: a target that rewards the old behaviour, a committee that still decides in private, or a sponsor who has stopped asking. That is a finding about the organisation, and it belongs in front of the executive team. Reporting it honestly is a sign the process is working, even when the news is poor.
There is also a regional point worth stating plainly. The regulators differ and so do their expectations, and a firm operating in London, Sydney or New York will meet different formal requirements. A coaching design should not be built to satisfy a regime. It should be built to change behaviour, with the governance and accountability expectations of the relevant regulator treated as constraints on how the work is run and reported.
How a board should judge whether coaching is worth the spend
Ask for three things. A one-sentence statement of the issue the coaching addresses. A list of observable behaviours with named observers. A table of system changes with owners and dates. Then ask what would convince you, at nine months, that the money was well spent. If the answer relies on satisfaction scores alone, the investment is weak. If it relies on what colleagues observe and what the system now does differently, it is defensible.
My own approach is to start with a diagnostic of where capability is uneven, using the Leadership Capability Diagnostic, then design the coaching and the structural changes together within the 5D Leadership Framework. Capability AI supports practice between sessions. If you want to talk through a specific leadership team, here is how I work. The same logic applies to the related piece on corporate coaching for fintech leadership.