Conduct risk is a form of business risk that refers to potential misconduct of individuals associated with a firm, including employees, third-party vendors, customers or agents interacting with the firm.
Conduct risk is typically associated with human misbehavior, unlike many other forms of business risk, such as a major network outage caused by systemic failure. Conduct risk poses a growing threat to companies across industries and jurisdictions because regulators are increasingly holding senior managers accountable for the actions of individuals associated with a firm.
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