Wall Street, not to mention the City of London and other global finance capitals, have a lot to do to restore public confidence. The financial crisis revealed major weaknesses in risk and liquidity management, misaligned compensation policies, limited disclosure, and lax underwriting standards.

This week, the Institute of International Finance, a group of the world’s leading financial services firms, offered a peek at their ongoing reform efforts. As you’d expect from a body with over 375 members headquartered in 70-plus countries, it’s a slow, gradual process.

The work is being spearheaded by the IIF’s Steering Committee on Implementation, which is co-chaired by Richard Waugh, President and CEO of Scotiabank, and Klaus-Peter Muller, Chairman of the Supervisory Board of Directors of Commerzbank AG.

In the area of executive compensation, a hot-button issue, a press release says that (an unspecified number of) firms across the industry have now committed, either internally or to their regulators and shareholders to implement the group’s compensation principles, that “incentives should be based on actual performance and aligned with shareholder interests and long-term, firm-wide profitability, taking into account overall risk and the cost of capital.”

It said “most leading firms” are expected to “meet the key requirements” early in 2010.

But the steering committee’s progress report, which can be downloaded the IIF’s website, isn’t quite as positive. It notes that “firms are particularly concerned about first-mover disadvantages” as well as “the possibility of being in a jurisdiction with more restrictive compensation policies.”

The report calls on regulators to “put in place agreed global policies with sufficient consistency across jurisdictions to ensure a level playing field for all financial institutions operating in key markets.”

Improvements in risk-management are more widespread. The IIF’s press release says that a sample survey shows the majority of firms are enhancing the role of the CRO and the risk function. “Specifically, firms have taken concrete steps to give the risk function a greater say in the development of corporate strategy and the development of new products. There is wide recognition in the industry that it is essential that the CRO have a strong voice and the ability to escalate any issue to the top of the firm for resolution by the CEO or, as appropriate, the board, taking full cognizance of the risk dimensions of the decision.”

However, the report itself notes that this reform is far from complete, and firms need to invest more in IT related to risk management and monitoring.