03.08.2026
The biggest risks in business are not always the ones on the risk register. Sometimes they sit quietly in the meeting room, unheard. That’s the inclusion gap, and it’s costing organisations more than they realise.
I have seen this play out time and again, and it is always the same story. A bank spends millions on a risk model that can read a market tremor from space, then ignores the analyst three desks down who knows the underlying data is rubbish. We pour money into algorithmic oversight, yet when an institution collapses or a regulator comes knocking, the root cause is almost always human. A failure of culture.
The workplace inclusion gap
According to the International Labour Organization, the global labour force participation rate for women is just under 47%, compared with 72% for men. That’s a gap of 25 percentage points, with some regions experiencing disparities of more than 50 percentage points.
This paints a picture. We talk about diversity as a recruitment metric and ignore the inclusion gap: the distance between having a diverse workforce and having a culture where those people actually feel they belong.
But, inclusion is not a soft HR initiative; it’s a hard-edged risk strategy. If your people do not feel they belong, they will not speak up when they see something going wrong. They will wait for someone else to flag it, and by then it is usually too late.
Beyond the tick-box: why compliance needs culture
Compliance spent too long as a legalistic, tick-box exercise. Vicky Stubbs, Managing Director in Compliance at Barclays, says the industry is finally moving toward genuine cultural change. The old way produced systemic failures like PPI, where, as she explains it, unsecured personal loans were often unprofitable and effectively subsidised by selling insurance on top. The incentives were skewed away from the customer.
The shift now is toward conduct risk that is as data-driven as credit risk. Whether you are a 200-person firm or a global bank, the fundamentals are the same: people have to roll up their sleeves together. We are moving from “did you hand over the right paper?” to using data to prove customer outcomes, and that needs a culture where everyone, from the graduate to the MD, owns the collective result.
As Vicky put it in a conversation with Sue Sanders on Women Who Make It Happen podcast:
“Your weaknesses will never become your strengths. Build on your strengths and manage your weaknesses so they are not detrimental. My strength should become stronger: I keep building on them, I keep working on them, and I manage my weaknesses so they’re not detrimental to the team.”
Psychological safety is strategic, not soft
There is a stubborn misconception that compassionate leadership means going easy on people. Ellen Watson Hicks, a veteran Chief Risk and Compliance Officer, argues the opposite. Compassion is a strategic tool, and what it creates is psychological safety.
In a high-stakes regulated environment, fear is the enemy of risk management. Fear stops a junior analyst flagging a discrepancy in a ledger. Trust lets them fix a problem before the regulator ever finds it. A safe environment is where people experiment, fail fast and learn. A frightened one is where mistakes stay hidden until they turn terminal.
In the video below, Ellen emphasises that people perform better when they feel trusted and empowered rather than fearful of mistakes.
“Compassionate leadership… is absolutely not the same as being soft or not expecting people to work hard or always just patting them on the head. It’s creating a psychologically safe space for people to experiment, fail fast and learn. Actually, that’s where you get your learnings from: it’s when things go wrong.”
Diversity of thought as a defence against groupthink
If everyone in your boardroom went to the same three universities and holds the same accountancy qualification, you have a blind spot. Hiring in your own shadow is a fast track to institutional trouble. Karen Connell and Alexandra Winward both argue boards need more than a room of accountants. They need atypical backgrounds, marketing or data, to provide real checks and challenges.
This is cognitive and social diversity, not only gender or ethnicity. In her interview, titled “7 Leadership Lessons from Alexandra Winward Every Financial Services Leader Should Hear”, Alexandra is open about being dyslexic, and explains how she treats it as an advantage, because she processes information and spots patterns differently from a standard executive:
Moreover, leaders like Clare Pearson and Hazal Muhtar point to how non-traditional, non-academic backgrounds guard against the groupthink that often precedes a bubble. Alexandra Winward also notes that returning mothers frequently bring exceptional organisation and prioritisation, which are core risk-management skills.
The air cover principle: protect the voices that challenge
The most important risks are often spotted by the people closest to the data – the juniors. In a rigid hierarchy, those are the first voices silenced.
Alison Tattersall, a veteran banking leader, runs on the air cover principle: a leader’s job is to clear the obstacles and protect junior talent so they can challenge the status quo without fear.
As Alison emphasised:
“My job was to provide air cover for them and to get out of the way and enable them to be fantastic. I definitely learn as much from my team as I do from the people above me. You have to bring in amazing creative young talent and understand that your leadership style has to be adaptable.”
In fintech the point sharpens.
Also, Karen Connell in her episode explains that the three lines of defence are often looser in smaller firms, so internal audit has to act more like a coach than a police officer. Coach the business on what good looks like, rather than only finding fault, and you build a collaborative defence that outlasts an adversarial one.
Authenticity as a performance multiplier
Being two people at once – the corporate mask and the real you – is exhausting, and that wasted energy should be going into decisions. Fleur Hicks and Nidhi Agarwal both make the point that when you park the ego at the door, the firm’s collective IQ rises.
This matters more in the age of AI. Nidhi Agarwal sees a future of AI super models handling the fragmented modelling for capital, fraud and credit. In a conversation with Sue Saunders, Nidhi shares her journey from automating analytics at HSBC to reimaging the next generation of model risk.
But as Fleur Hicks argues, data alone cannot make the call in complex private markets. You need a qualitative overlay. Human oversight is the thing that stops fragmented AI models failing quietly. We need people being people, empathetic, intuitive and authentic, to catch the risks the code cannot see.
The strongest compliance culture is one where everyone belongs
Policies and controls matter. But they only work when people feel able to use them. An inclusive culture, where every employee feels respected, heard and safe to speak up, is one of the most effective ways to identify risks before they become regulatory failures.
Building that culture takes a specific calibre of governance, risk and compliance talent: the leaders with both the technical brain of Nidhi’s Agarwal and the grounded common sense Vicky Stubbs has.
At Morson Edge, we help banks, insurers and fintechs turn operational rigour into a competitive advantage by finding the people who bridge technical skill and cultural intelligence, the ones who do not just fill a role but strengthen your firm’s human defences. You can see how on our Morson Edge Financial Services page.
One last question. If your most junior employee spotted a serious regulatory breach this afternoon, would they feel safe enough to tell you straight away? Or would they spend the weekend worrying about how to word the email?
