A report published today highlights how insurance companies are concerned about what conduct risk really means in practice, including both direct and B2B and B2C operating models. There is increasing recognition that further work is necessary in establishing an underlying conduct risk framework, through which conduct risk is managed from board level to the rest of the company.

Survey respondents were positive in their outlook on raising internal awareness of conduct risk, appreciating the importance of adopting a customer focused approach, and ensuring key drivers of this are embedded into the business plan.

Ian Woodhouse, insurance director at PwC, said: "Insurance companies must focus on their customers to embed conduct risk in their organisations. The conduct agenda is a great opportunity to get closer to their customers and help rebuild consumer trust in financial services. This can be done by looking at the full customer journey and the processes involved - from marketing to point of sale to product provision, and placing appropriate controls around these."

Despite the lack of defined strategy, over two thirds of those surveyed believe that their organisation is conscious of FCA expectations around conduct risk and that work is being done to build a fully competent strategy. Other challenges for those surveyed include appropriate communication from boards of what a good conduct culture is, and combining current compliance and conduct policies together to form a single strategy.

David Taylor, insurance partner at PwC said: "Employee engagement is clearly a key to success. A lot of the work that has been done so far has been done from the bottom up, and conduct risk needs governance. There is a clear expectation of how you manage success, and regulators are asking direct questions of the board. Those who make the most progress are those who recognise the regulatory drivers which affect everyone in the business. This is a firm wide role - it's very dynamic."

The report also reveals that 67% of organisations have not yet communicated its conduct strategy with employees; and that over half of organisations still face the challenge of successfully defining conduct risk appetite, and see this as the biggest challenge to their organisation.

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