By Paul Bennett, Audit Manager and Daniel How, Head of Internal Audit, Asta, Chair of the LMA Internal Audit Committee  

Culture has become one of the most important drivers of performance, conduct, and long-term sustainability for Managing Agencies and syndicates in the Lloyd’s market. A strong, ethical, and professional culture enables effective decision-making, supports robust governance, and protects policyholders, capital providers, and the wider market. Regulators are increasingly focused on cultural indicators, from tone at the top through to psychological safety and employee empowerment, making it clear that culture is not a “soft” issue, but a central component of resilience and risk management. 

Internal audit functions that combine deep Lloyd’s market knowledge with an ability to assess behavioural and organisational factors are uniquely placed to provide assurance and insight on cultural effectiveness. By undertaking culture audits, they can help syndicates benchmark against best practice, identify areas for improvement, and demonstrate a clear commitment to conduct and governance excellence. 

The regulatory imperative 

Both the PRA and Lloyd’s have made it clear that culture is under the spotlight. Recent thematic reviews have examined leadership behaviours, psychological safety, and diversity and inclusion, placing the onus firmly on Boards to demonstrate accountability. For Managing Agents and syndicates, this means culture is no longer an abstract concept but a supervisory priority, with culture now a ‘hurdle’ Principle for doing Business (PBO). 

Internal audit plays a key role in providing Boards and regulators with evidence that cultural risks are being identified, measured, and addressed. Independent assurance can highlight where adopted values do not align with behaviours in practice, and whether cultural frameworks genuinely support good conduct. 

Leadership and decision-making 

Leadership behaviours set the tone of an organisation. Effective leaders make transparent decisions, communicate openly, and role-model expected behaviours. Where decision-making is opaque or inconsistent, cultural weaknesses can emerge that undermine trust. Internal Audit provides assurance that leadership processes align with stated values, ensuring an environment of clarity, accountability, and fairness. 

Employee mindset and group dynamics 

Culture is reinforced by how people work together. Group dynamics influence whether employees feel included, respected, and aligned with company values. Internal Audit can review recruitment, training, and evaluation processes to assess whether desired behaviours are embedded and lived daily, rather than remaining aspirational. For Boards, this provides valuable insight into whether organisational purpose and values are genuinely reflected in day-to-day practice. 

Learning from errors and encouraging challenge 

A healthy culture treats errors as opportunities for learning, not blame. Constructive criticism reduces the risk of repeated mistakes and encourages innovation. Internal Audit can evaluate error-management frameworks, incident reporting, and escalation processes to confirm whether organisations foster continuous improvement and accountability, or whether cultural barriers are preventing employees from speaking up. 

Tone from the top and stakeholder relationships  

The tone from the top is critical in shaping behaviours across both Managing Agents and their syndicates. Strong, consistent messages from Boards and Executives promote trust and collaboration, while weak or inconsistent communication risks confusion and misaligned priorities. Internal Audit can provide assurance that senior leaders articulate cultural expectations clearly and that these are reinforced in their interactions with stakeholders, clients and employees alike. 

Empowering employees and building psychological safety  

An effective culture empowers employees to raise concerns without fear of retaliation. Psychological safety underpins both innovation and resilience. Internal Audit can assess the effectiveness of “speak up” channels, employee engagement surveys, and whistleblowing frameworks, providing assurance that employees feel safe to be heard and that their input leads to meaningful action. 

Managing conduct risk by prioritising culture  

Conduct risk is inseparable from organisational culture. Where culture is weak, the likelihood of regulatory breaches, reputational damage, and financial loss increases significantly. Boards that treat culture as a core management priority are better positioned to manage conduct risk effectively and sustainably. Internal Audit can provide assurance that conduct risk is monitored through meaningful indicators – such as customer outcomes, employee behaviours and the quality of decision-making  – and that cultural assessments are embedded within business planning and the operating model. 

Culture as a strategic asset 

Culture is not separate from strategy; it is embedded in how a business operates. Business planning and target operating models should include clear cultural objectives so that strategic decisions consistently reinforce desired values and behaviours. Internal Audit can evaluate whether plans and operating models explicitly consider cultural implications end-to-end and whether the organisation measures success not only through financial metrics but also through indicators of cultural health (for example, speak-up effectiveness, conduct outcomes, leadership behaviours, and risk-culture maturity). 

Culture and emerging risks 

The role of culture is especially critical in how firms respond to emerging risks. Challenges such as ESG and climate risk, cyber resilience, and the adoption of artificial intelligence all depend on employees feeling empowered to challenge, escalate, and innovate responsibly. Internal audit can help Boards understand whether cultural conditions are in place to support responsible innovation and long-term resilience in these fast-evolving areas. 

Looking ahead 

When internal audit places culture at the heart of its agenda, it provides significant added value. Independence, professionalism, and an understanding of Lloyd’s expectations allow internal audit to deliver insights that strengthen governance, reduce conduct risk, and build resilient, ethical organisations. The outcome is clear: a culture that promotes strong leadership, empowered employees and effective conduct management leads to better outcomes for policyholders, capital providers, and regulators – and ensures long-term success in the Lloyd’s market. 

If you would like to continue the conversation, get in touch with Audit Manager, Paul Bennett at p.bennett@asta-uk.com and Head of Internal Audit, Daniel How, at d.how@asta-uk.com