A heightened level of transparency among financial institutions is crucial to restore investor trust and to pull the global financial system out of the current crisis, a panel of experts said on Thursday.

Speaking about risk management at the University of Toronto’s Rotman School of Management, the panelists said the crisis was triggered by structural problems at the core of the financial system, rather than simply a lack of regulatory oversight.

“What this industry needs is not just a fresh infusion of capital or some new regulations; it needs a whole new operating model,” said Don Tapscott, adjunct professor of strategic management at Rotman, and co-author of the book Wikinomics.

An increase in transparency is the most important goal that the industry must pursue, according to Robert Tapscott, interim CEO of RISConsulting Group, a Boston-based consulting firm specializing in financial risk and capital management. In particular, he said financial institutions need to be more transparent on the increasingly complex securities and derivatives that have emerged in recent years.

“Governments, regulatory agencies, associations haven’t been able to restore faith and confidence in the system,” Tapscott said. “Openness, transparency and trust on a global basis is the only thing that will do it.”

Financial institutions that are willing to disclose valuation and risk management methods and undergo thorough forensic analysis will ultimately benefit in the marketplace, Tapscott added.

Darrell Hendrix, the CEO of the RISConsulting Group, said risk management in the financial services industry has fallen short. Specifically, risk management involves both analytics and human judgment, and the latter component has failed to develop properly, he said.

“Management, judgment and foresight, among other things, didn’t happen this time around,” he said.

Another key problem within the financial services industry is perverse short-term incentives for industry players, the panelists agreed. For instance, upper management at many financial institutions simply work towards posting higher quarterly earnings than their competitors.

As another example, those who structure securities tend to place greater focus on meeting rating agencies’ requirements for high ratings than actually reducing the investors’ risk, Hendrix said.

“It’s these short-term incentives that are the real problem,” said John Hull, co-director of the Master of Finance program at Rotman. “We have to find a way of giving people longer incentives.”

Hull suggested that the compensation structure of financial institutions must change to alter these short-term incentives, but he acknowledged that the industry would likely resist such a change.

“What we really have to do is change the culture in financial institutions, so that this doesn’t happen again,” Hull said.

Don Tapscott said it’s crucial for any type of solution to the crisis to involve global cooperation, since the financial industry extends beyond borders.

“Risk is global in character,” he said. He calls for national leaders to hold a form of G20 of the financial services industry.