The “tone from the top” is crucial to a sound risk culture, according to a new guideline from the Financial Stability Board.

The behaviour of directors and senior management reflects an organisation’s core values, and leaders “should systematically develop, monitor and assess the culture of the financial institution”.

Employees at all levels must understand the approach to risk and be held accountable, the guideline says.

Sound risk culture will allow a range of views in decision-making processes, to stimulate a positive, critical attitude among staff and an environment of open, constructive engagement.

Performance and talent management should encourage and reinforce desired risk management behaviour.

Comments on the draft guidance on supervisory interaction with financial institutions on risk culture are due by January 31 next year.