REBUILDING JUDGEMENT IN MARKETS
Why Markets organisations are struggling to decide, not to deliver
Over the past decade, Markets businesses have invested heavily in change. New operating models, new control frameworks, new technologies, new governance structures. On paper, many institutions are more sophisticated, more regulated and more tightly managed than at any point in their history.
And yet something critical has been quietly eroded in the process: judgement.
This loss rarely announces itself through failure. It shows up more subtly in delayed decisions, excessive escalation, defensive behaviours and a growing reliance on process to substitute for experience. Markets organisations are delivering more change than ever, but deciding less confidently, learning more slowly and operating with diminishing conviction.
The problem is not a lack of intelligence, data or effort. It is a structural weakening of judgement and the way change has been designed and delivered has played a larger role in that erosion than most firms are willing to acknowledge.
This challenge is not distributed evenly across the industry. The performance gap between Tier 1 institutions and their Tier 2 and Tier 3 counterparts has widened noticeably in recent years. One structural driver often overlooked is the divergence in how these firms have responded to cost pressures. Tier 1 banks, supported by revenue scale, have largely preserved experienced senior central resources in strategy, COO functions, transformation and risk oversight. Many Tier 2 and Tier 3 institutions, facing tighter cost envelopes, have shed much of this capacity to fund improved controls and reporting. The result is a hollowing-out of the very capability needed to integrate risk, performance and change. Where Tier 1 firms retain the judgement to navigate complexity, many smaller institutions are left managing through process alone.
When "transformation" is referenced here, it is not meant in the narrow sense of large-scale restructuring or formal change programmes. The erosion of judgement described in this piece applies just as much to incremental operating-model changes, control enhancements, governance tweaks and day-to-day decision-making as it does to multi-year initiatives. In practice, it is often these smaller, cumulative changes, made without sufficient attention to judgement and accountability, that do the most damage.
Judgement is not a soft skill. It is an operating capability.
In Markets businesses, judgement is often spoken about as if it were an individual trait, something senior people either have or lack. In reality, judgement is an organisational capability shaped by design choices, incentives and where authority is allowed to sit.
Judgement is what allows experienced practitioners to operate effectively under uncertainty, to distinguish signal from noise, risk from error, volatility from failure. It is what enables firms to act decisively when information is incomplete and time is constrained.
Crucially, judgement does not flourish in isolation. It depends on proximity to real outcomes, feedback loops that connect decisions to results and the freedom to exercise discretion within understood boundaries. When those conditions weaken, judgement withers regardless of how many smart people the organisation employs.
How change unintentionally dismantled judgement
Most Markets change over the past decade has been well intentioned. It was driven by regulatory pressure, cost constraints, technology change and a genuine need to professionalise legacy operating models.
Taken together, however, these efforts have had several unintended consequences.
Decision-making has been progressively extracted from the front line. Authority has migrated upwards into committees and sideways into functions designed to own process, policy or oversight. Decisions that were once made close to the risk are now made at a distance from it.
At the same time, process has increasingly substituted for experience. Where judgement once sat with seasoned practitioners, it has been replaced by rules, checklists, attestations and approval gates. This creates consistency, but it also flattens nuance. Organisations become very good at following procedure and much less good at interpreting context.
Escalation has followed naturally. In environments where discretion is risky and accountability is asymmetric, the rational response is to escalate. Over time, this trains the organisation to defer decisions rather than own them. Senior forums fill up. Confidence drains out.
Finally, the mechanics of change themselves have crowded out thinking. Delivery milestones, regulatory deadlines and programme governance consume attention. Success becomes defined by completion rather than by improvement in how the business actually operates.
None of this is accidental. It is the predictable outcome of design choices made under pressure.
The cultural symptoms are easy to misread
When judgement erodes, organisations often describe the problem in cultural terms: risk aversion, lack of accountability, disengaged leadership or poor decision quality.
These diagnoses are not wrong, but they are incomplete.
Culture, in this context, is not the cause. It is the symptom of an operating model that has narrowed the space in which judgement can be exercised.
Talented practitioners quickly learn where discretion is welcome and where it is punished. Over time, many adapt by becoming procedural rather than thoughtful, defensive rather than curious. Others opt out entirely, either physically by leaving or psychologically by disengaging from leadership roles that carry responsibility without authority.
The result is not a collapse in competence, but a steady hollowing-out of conviction.
Why this matters now more than ever
Markets businesses are entering a period where judgement is becoming more, not less, important.
Risk is harder to interpret. Market structure is more complex. Technology has accelerated execution but increased fragility. Regulatory frameworks increasingly test understanding rather than form. Clients expect resilience, continuity and confidence under stress.
At the same time, experienced talent is scarcer, organisational slack is thinner and tolerance for error is lower.
In this environment, organisations that cannot exercise judgement effectively default to two sub-optimal strategies: excessive conservatism, which protects process but erodes relevance, or excessive centralisation, which creates comfort at the cost of speed and insight.
Neither is sustainable.
Rebuilding judgement is not about going backwards
Rebuilding judgement does not mean dismantling controls, weakening governance or returning to informal practices. Nor does it mean elevating individual discretion above discipline.
It means redesigning change so that it strengthens, rather than suppresses, judgement.
That requires uncomfortable questions. Where has understanding been replaced with process? Where have decisions moved away from the people best placed to make them? Where do incentives reward escalation over ownership? Where does governance protect roles rather than improve outcomes?
Answering these questions requires senior, independent perspective and a willingness to see the organisation as it actually operates, not as it is described in policy.
Judgement as the missing link
Markets change has become very good at altering structures and processes. It has been less effective at strengthening the capability that allows those structures to work under pressure.
Judgement is that capability.
When judgement is weak, risk management becomes procedural and performance becomes incidental. When judgement is strong, risk and performance remain connected and the organisation can act decisively without becoming reckless.
The structural consequences of losing that connection, in cost, capital, resilience and operating coherence, are explored in a subsequent piece.
But the starting point is human, not technical.
If Markets organisations want to operate effectively in the next phase of complexity, they will need fewer frameworks that tell people what to do and more operating models that allow experienced judgement to matter again.
For further discussion and initial consultation please contact FMCR at contact@fmcr.com.