CROs on speaking out, and Murray’s view on governance

  • By Christine St Anne

Risk professionals need to remain vigilant amid calls from business leaders like AMP chair David Murray for a rethink on corporate governance rules, according to a panel of CROs at the recent AB+F/Randstad Leaders Lecture.

Recently Murray said that companies were distracted by the current ASX corporate governance rules with its focus on sub-committees and that the primacy of the CEO needs to be restored.  

The panel included GPT Group chief risk officer Diona Rae (pictured left); MoneyPlace CRO Paul Abbey (pictured second from left); Pepper Financial CRO Thierry Merand  (pictured second from right) and DXC Technology managing partner Connuil McEvedy (pictured right).

Questioned over Murray's views, the CROs acknowledged that it was important to strike a balance between being vigilant over risk management and ensuring business objectives are met.

“In a sense we have gone too far in taking away the ownership from the business. As a risk professional we have to help the business make money not lose money. The reality is though that we have to meet regulatory requirements,” Rae said.

Over the last 12 months, Pepper Group has focused on strengthening its governance. The business looked at what was being played out in the market such as APRA’s review of the Commonwealth Bank’s governance, culture and accountability approach and of course the royal commission.
 
Merand acknowledged that while CBA had strong governance, the key finding from the APRA report was that the approach was not aligned to the risk culture of the business.

“Having a strong governance is great but making it work is the challenge and that is the culprit, not the many committees businesses have.

“The bank had a strong operational risk framework on paper, it just was not effectively implemented. Again, it goes back to culture and there was this perception that the culture was reactive rather than proactive,” Merand said.

Rethinking governance

For Merand, Pepper’s focus on putting the customer first, spurred the business to rethink its governance particularly in light of the royal commission.

“Even though we were not part of the [royal commission] hearings, a few months ago we decided to set up a regulatory working group and try to analyse what was coming out of the hearings and what processes we can improve,” Merand said.

“This included ways to improve both the businesses’ and broker conduct by updating its processes and culture. We wanted to make sure that we had the balance right between taking on risk but also treating the customer fairly.”

McEvedy called on the industry to be frank and fearless.

“As risk managers we must back ourselves. We need to be visible. It’s our time to shine,” he said.

The CROs also highlighted the biggest risks they are facing to their business.

As a business that will benefit from comprehensive credit reporting, Abbey’s biggest risk was the potential of the Comprehensive Credit Reporting (CCR) to be derailed.

“We have been pushing for CCR for two and half years now. The banks trying to derail the CCR were one of the bigger risks we faced.

“We were concerned that the industry could stop something that was in the best interest of the industry. It’s great, however, to see how things have progressed and are in fact moving faster,” Abbey said.

The AB+F August edition includes a full report on the CRO panel