Introduction
Financial Trading and Safety Culture
Safety Culture
References | Domain | Methodology | Dimensions | Interesting finding |
---|---|---|---|---|
Håvold (2010) | Fishing vessels | Safety culture questionnaire, 50 questions—distributed to experts in EU | Attitudes towards Rules and Regulations Safety training and drills Job satisfaction Fisherman’s safety attitude Conflict between work and safety Pressure Management safety attitude | Safety attitude of management had a strong influence on a company’s safety policy—fisherman not involved in accident showed more positive attitudes towards safety culture |
Jeffcott et al. (2006) | Railway | Two-year qualitative study, 40 interviews and 50 focus groups with 500 employees in 4 organisations | Stakeholder relationships Management commitment Performance regime Blame and culpability Knowledge management Organisational learning Resources Morale Homogeneity of culture | How safety culture influences trust within the organisation—trust is key to safety performance TOCs do not approach the classical ‘safe’ organisation model (e.g. they exhibit a rigid rather than flexible hierarchy and procedures, deficiencies relating to perceptions of management commitment) |
Goncalves Filho et al. (2010) | Petrochemicals | Questionnaire measuring 5 aspects of OSC in 23 petrochemical companies, adopting the model of Hudson (2001) | Information (incident reporting) Organisational learning Involvement (participation of employees) Commitment (planning, priorities) Communication | No theoretical or empirical research on safety culture in this industry—this study shows that the model of Hudson (2001) and the revised framework can identify levels of safety culture maturity in this domain |
Olsen (2010) | Healthcare and petroleum sectors | Questionnaires, 1919 (55% return) in health care and 1806 (52% return) in Oil and Gas | Organisational management support for safety Transitions and teamwork across units Supervisor/manager expectations and actions promoting safety Learning, feedback and improvement Teamwork within units | Testing the feasibility of cross-industrial structural model of identifying general safety climate concepts |
Lu and Yang (2011) | Passenger Ferry | Survey data from 155 experts in Taiwan | Safety policy Safety motivation Emergency preparedness Safety training Safety communication | Study provides empirical evidence of the importance of safety climate in explaining worker’s safety behaviours in passenger ferry operations |
Reader and O’Connor (2014) | Air traffic control | Psychometric properties of SC model (ATM) were examined in 17 countries, from 4 distinct regions (North, East, South, West)—expert staff (n = 5176) and management staff (n = 1230) | Management Commitment to Safety Collaborating for safety Incident reporting Communication Colleague commitment Safety support | Demonstrated for the first time that when safety culture is tailored to specific industry, they can operate consistently across national borders |
Lee and Harrison (2000) | Nuclear power stations | 120-item questionnaire in three nuclear power stations. Seven focus groups, each composed of 10–12 staff and addresses attitudes and behaviour | Confidence in safety (e.g. control measures, safety standards) Job satisfaction (e.g. trust in colleagues) Participation (e.g. perceived empowerment) Risk (e.g. organisational risk-taking, risk versus productivity) Safety rules (e.g. complexity of instructions) Stress (e.g. personal stress, job security) Timing/selection (e.g. quality of training) | Personnel safety surveys can usefully be applied to deliver a multi-perspective, comprehensive and economical assessment of the current state of a safety culture and explored the dynamic of inter-relationships of its ‘working parts’ |
Ek et al. (2003) | Air traffic control | Observations of daily work, COPSOQ questionnaire with 95 questions representing 9 dimensions, standardised interview with 9 employees at each control centre | Working situation Communication Reporting Justness Flexibility Learning Safety-related behaviour Attitude to safety Risk perception | Safety culture varies across locations and personnel levels. All groups felt that they had not received enough training in how the communication should function in emergencies. Managers tend to be very positive in their reports of safety culture |
Wiegmann et al. (2004) | Theoretical literature analysis (all domains) | Systematic literature review | Organisational commitment Management commitment Employee empowerment Rewards system Reporting systems | This study posits that there is considerable disagreement among professionals on how to define safety culture and to differentiate it from safety climate |
Farrington-Darby et al. (2005) | Railway | Group and individual semi-structured interviews were employed. 34 respondents were interviewed in 6 groups (front-line operational staff who volunteered) | Communication Rule dissemination Pre-job information Supervisor visibility Equipment Planners competency Perceived purpose of paper work Training methods | Front-line actors have a strong underlying sense that safety is not only their responsibility—but that they will look for an ‘easy and comfortable’ way of achieving task even if this involves increased risk. Senior management were seen as having considerable influence on how easy or difficult it was to be ‘safe’ |
Cox and Cheyne (2000) | Offshore environments | Focus group discussions (n = 40) using both offshore and onshore personnel in 3 organisations at 6 locations. N = 375 employees in groups ranging from between 3 and 12 made up the focus groups. 83 managers, 181 worked on onshore, 194 offshore | Management commitment (e.g. supervisor support) Priority of safety Communication (e.g. safety information) Safety rules (e.g. complexity of procedures) Supportive environment Personal priorities and need for safety Personal appreciation of risk (e.g. risk-taking behaviour) Involvement (e.g. participation) Work environment (e.g. equipment and design) | Most common dimensions were management commitment, management actions and the physical work environment and safety issues and the priority given to safety issues. This helped construct a common taxonomy for the industry—set of safety climate assessment tools |
Flin et al. (2000) | Energy sector | Review of methods and results from industrial surveys, thematic basis of 18 scales used to assess safety climate. Thematic analysis following a literature search, 18 published reports of safety climate surveys | Management Safety system Risk Work pressure Competence Procedures/rules | Suggests that the most typically assessed dimensions relate to management (72%), the safety system (67%), risk (67%), in addition themes relating to work pressure and competence appear relevant |
Halligan and Zecevic (2011) | Health care | Literature review to identify the concepts of safety culture prevalent in the healthcare domain—studies published between 1980 and 2009. 1324 titles were reviewed, 1124 unique abstracts, 200 full text papers, 139 papers fully reviewed | Leadership commitment to safety Open communication founded on trust Organisational learning A non-punitive approach to adverse event reporting and analysis Teamwork Shared belief in the importance of safety | Attempts to determine a common set of definitions and dimensions that can enable researchers to better share information and strategies to improve methods |
Clarke (1999) | Questionnaire to elicit the perceptions of 312 rail staff using 25 ‘dimensions’ of railway safety | Management Commitment to Safety Conflict between work and safety Rules and processes Skills and attitudes of employees equipment | The study shows that whilst there is a shared perception of the importance of safety across the group, inter-group perceptions are not representative. Furthermore, inter-group perceptions are essential to mutual trust and the foundation of positive safety culture |
Management Commitment to Safety: Policies with regard to supervision and motivation of the workforce and the adherence to the rules (e.g. perceptions of staff for the managerial expectations on risk-related behaviours) Blame and culpability Employee participation (e.g. perceived empowerment) Management safety attitude Supervisor/management expectations Morale Safety motivation Shared belief in the importance of safety Risk: Policies with regard to which, when and how risks are evaluated (e.g. responding to error, risk-taking behaviours) Appreciations or risk (e.g. risk-taking behaviour) Confidence in safety (e.g. control measures, safety standards) Rules and Regulations: Policies with regard to formal procedures and instructions (balanced by what is trained and how workers are recruited and selected). Basically, policies determining the structure of work (e.g. safety protocols) Checklists Planning Rule dissemination Safety rules (e.g. the complexity of instructions) Safety training and drills Systems: Policies with regard to how identified risks are avoided, reduced or controlled by design or layout (e.g. policies determining the choice of barriers that control present dangers and risks) and policies with regard to maintenance and inspection (e.g. policies, incident reporting) and how often, etc.) Incident reporting (non-punitive) Internal audits Organisation of system access rights (e.g. access to information based on roles) Resources Systems alerts and controls Systems maintenance (e.g. breach reports sent consistently) Collaboration: Policies with regard to effective collaboration and interaction of (groups) of people (e.g. communication, teamwork on safety) Ability to speak up within the organisation Transitions and teamwork across units Trust in colleagues Conflict between work and safety (e.g. risk appetite and performance goals) |
The Current Study
Method
Case Selection
Case number | Organisation | Year | Fine | Description of misconduct |
---|---|---|---|---|
1 | JPMorgan Chase Bank N.A. | 2014 | £222M | Failed to control its London voice trading operations in the G10 spot and FX market |
2 | JPMorgan Chase Bank N.A. | 2013 | £196.5M | Losses caused by high-risk trading strategy, weak management of that trading and an inadequate appreciation of risk |
3 | UBS AG | 2012 | £160M | Misconduct relating to the calculation of EURIBOR, manipulation of certain currencies and inter-dealer collusion |
4 | Barclays Plc. | 2012 | £85M | Inappropriate submissions following requests by derivative traders (LIBOR) |
5 | UBS AG | 2012 | £29.7M | Rogue trading activity on exchange traded index future positions. Underlying positions were disguised by the use of offsetting strategies, which had no economic reality and no associated external risk position |
6 | Barclays Plc. | 2014 | £26M | Failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate Risk Management Systems (gold price fixing) |
7 | UBS AG | 2009 | £8M | Unauthorised foreign exchange and precious metals trading |
8 | Toronto Dominion Bank (London Branch) | 2009 | £7M | Failing to conduct business with due care, skill and diligence—numerous and serious failings in the Systems and controls concerning trading book pricing |
9 | Credit Suisse | 2008 | £5.6M | Failing to conduct business with due skill, care and diligence. Failings relate to the pricing of certain asset-backed securities |
10 | The Royal Bank of Scotland Plc./N.V. (‘RBS’) | 2013 | £5.6M | Failing to accurately report trading transaction as a result of significant Systems challenges post-takeover |
Organisational Communication: Policies with regard to effective collaboration and interaction of (groups) of people (e.g. policies determining who should talk with whom about what) Ability to speak up within the organisation Transitions and teamwork across units Trust in colleagues Management Commitment to Safety: Policies with regard to supervision and motivation of the workforce and the adherence to the rules (e.g. what is acceptable behaviour and how deviations should be corrected) Blame and culpability Employee participation (e.g. perceived empowerment) Management safety attitude Supervisor/management expectations Safety motivation Shared belief in the importance of safety Risk Management: Policies with regard to which, when and how risks are evaluated (e.g. what the present dangers and risks are and how they should be perceived and controlled) Appreciations or risk (e.g. risk-taking behaviour) Confidence in safety (e.g. control measures, safety standards) Conflict between work and safety (e.g. risk appetite and performance goals) Rules and Regulations: Policies with regard to formal procedures and instructions (balanced by what is trained and how workers are recruited and selected). Basically, policies determining the structure of work Rule dissemination Safety training and drills System Implementation: Policies with regard to how identified risks are avoided, reduced or controlled by design or layout (e.g. policies determining the choice of barriers that control present dangers and risks) and policies with regard to maintenance and inspection (e.g. when (preventative vs corrective) and how often, etc.) Incident reporting (non-punitive) Organisation of system access rights (e.g. access to information based on roles) Resources Systems alerts and controls Systems maintenance (e.g. breach reports sent consistently) |
Procedure
Analysis
Dimensions | Sub-dimensions | Description | Example | Coding frequency |
---|---|---|---|---|
Organisational Communication | 124 (55%) | |||
Ability to speak up | Refers to extent to which employees are comfortable or perceived to be able (e.g. organisational constraints) to voice concerns inter-/intra-team | ‘Lack of product knowledge within the collateral team which meant that no effective challenge was made’ | 52 (23%) | |
Transitions across teams | Refers to the coordination of processes and tasks within and between interdisciplinary teams | ‘Work streams operated in silos; those preforming the work lacked awareness of the overall context’ | 26 (11%) | |
Trust in colleagues | The measure of confidence and competence in team members | ‘These traders formed close, tightknit groups or one-to-one relationships based upon mutual benefit’ | 25 (11%) | |
Total | 227 (25%) | |||
Management Commitment to Safety | 105 (62%) | |||
Blame and culpability | A measure of the culture of blame shifting or lack of acceptance of organisational responsibilities | ‘Are we guilty of being part of the pack? You could say we are’ | 6 (4%) | |
Employee participation | The extent to which employees perceive they are able to contribute to decisions and organisational process | ‘Front office was able to input, change and approve FX trades with no effective challenge from the Back Office’ | 15 (9%) | |
Management safety attitude | Management perceived prioritisation of safety and productivity | ‘Senior management at high levels within Barclays expressed concerns over this negative publicity’ | 12 (7%) | |
Manager expectations | The perceived expectations of management to perform safely | ‘Senior management concerns in turn resulted in instructions being given by less senior managers at Barclays to reduce LIBOR submissions in order to avoid negative media comment’ | 10 (6%) | |
Morale | The confidence, enthusiasm and discipline of the team at a specific time | ‘The external trader thanks Trader G for Barclay’s LIBOR submissions later that day; “Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger”’ | 1 (0.5%) | |
Safety motivation | The reasons for demonstrating good or poor safety behaviour | ‘The authority was deliberately misled on one occasion’ | 12 (7%) | |
Shared belief in the importance of safety | The beliefs and values in regard to safety that originate from manager-directed joint learning | ‘Although action plans were in place to improve processes for future months, no additional scrutiny of the March month-end valuation process was undertaken by CIO Finance or CIO VCG management’ | 9 (5%) | |
Total | 170 (19%) | |||
Risk Management | 96 (56%) | |||
Appreciations of risk | The perceived likelihood and action or inaction taken as a result of gaining or losing asset value | ‘Barclays did not believe the submission of LIBOR was an area of significant risk’ | 31 (18%) | |
Confidence in safety | The state of being certain with the management’s course of action in regard to safety process and procedure | ‘Business model placed significant reliance on the honesty of employees and the supervisory obligations of Desk Heads without taking steps to mitigate against the risk that employees would act incompetently or dishonestly’ | 5 (3%) | |
Conflict between work and safety | Impacts the decision to meet performance requirements (productivity) or to adhere to the standard operating procedure (safety) | ‘At the direction of the SCP management, they deliberately mismarked the SCP in order to conceal what one trader believed to be genuine losses’ | 38 (22%) | |
Total | 170 (19%) | |||
Rules and Regulations | 91 (60%) | |||
Planning | The existence of procedures to evaluate risks and establish the necessary safety measures for avoiding accidents | ‘Reassignments and reorganisations within certain control functions, together with remote supervision and demanding workloads, exacerbated the situation’ | 1 (0.7%) | |
Rule dissemination | The availability (e.g. access) and distribution of information in regard to safety rules within and across the organisation | ‘Compliance replied with appropriate advice by email, there is no record of wider dissemination of the guidance or of steps to ensure this was reflected in (JPMorgan’s) policies or controls’ | 25 (16%) | |
Safety rules | Refers to the existence of protocols and procedures for operating safely during routine and non-routine tasks | ‘Compliance reviews lacked depth and a robust risk assessment process. The monitoring (of international wealth business) had limited impact on identifying and improving the control framework’ | 13 (9%) | |
Safety training and drills | The existence of training programs or opportunities to simulate situations where employees face routine and non-routine tasks | ‘The firm’s lack of specific training and guidance, given the absence of clear and sufficiently-tailored policies and procedures … meant that personnel may have been unaware’ | 22 (15%) | |
Total | 152 (17%) | |||
Systems implementation | 100 (53%) | |||
Incident reporting | A method of recording details of non-routine events that occur within the organisation that can undermine organisational safety and performance (e.g. human error, Systems error) | ‘It failed appropriately to escalate issues that may have led to earlier detection of the pricing issues’ | 19 (10%) | |
Internal audit | The provisions of independent assurance that Risk Management, governance and internal control processes are operating effectively | ‘Internal audit failed appropriately to follow up, finalise and report the finding that GMO were accepting market quotes from the front office as independent’ | 7 (4%) | |
Organisation of system rights | Segregation of access to system information and modifications based on job responsibilities | ‘There was confusion within GMO as to the segregation of duties and responsibilities in conducting the IPV process’ | 14 (8%) | |
Resources | The efficient apportioning of time, capital and personnel | ‘CIO VCG needed to manually copy this data into its own price testing spreadsheet row by row. This resulted in data entry errors’ | 10 (5%) | |
System alerts and detections | The capability of the system to accurately monitor and detect system abuse | ‘There was no automatic filter in the trade input Systems which identified off market or large notional transactions and the amendment of a price’ | 21 (11%) | |
System maintenance | The timely maintenance and modification of system controls and capabilities | ‘(Barclays) made no changes to its Systems and controls to take account of the BBA’ | 16 (9%) | |
Total | 187 (21%) |