Does executive accountability enhance risk management and risk culture?

We evaluate a novel regulation designed to address ongoing risk management failures: Australia's Banking Executive Accountability Regime (BEAR). This mixed methods study draws on a survey and 41 interviews with accountable persons and their reports across 15 organisations. Consistent with theory and previous experimental research, the study demonstrates the benefits of enhanced accountability for promoting more diligent ‘system 2’ behaviour. We provide evidence that BEAR promotes greater felt accountability among senior executives which in turn stimulates more proactive and diligent risk management behaviour. This behaviour has the potential to attenuate many of the behavioural biases associated with risk management failures.