WC CFO TheStrategicCFO#44 Online NZ Final - Flipbook - Page 1
GOVERNANCE
There was too often little
or no clarity on where
accountability should
rest and therefore little
or no consequence for
poor outcomes,
she said.
If an organisation exhibits a lack of
accountability and responsibility in
the actions of its Board and its senior
leadership team, and therefore is
likewise guilty of poor governance
practices, it follows that the state of its
culture is at the centre of the problem.
But how a Board provides effective
oversight of organisational culture –
and by extension oversight of nonfinancial risk (operational, compliance
and conduct risk) - is the topic of
ongoing boardroom discussion even
beyond banks, superannuation funds
and other financial institutions.
Directors more broadly are pondering
how the findings of Commissioner
Hayne impact their own organisations,
especially how the “voice of risk” is
heard, and whether customers and other
stakeholders are being treated fairly.
The response to the
bushfire crisis is
considered by Rodwell
as one way in which
the message is being
heard, with banks,
superannuation funds
and insurers – as well
as a wide variety of
other organisations –
helping bushfire victims
despite the cost to the
bottom line.
”
But in parallel, ongoing revelations
about poor practices by companies, from
allegations of anti-money laundering
breaches associated with sex-industry
activities in the Philippines and South
East Asia by Westpac, through to
admissions of underpayment of wages
and superannuation at big brand
companies such as CBA, Qantas, Coles,
Super Retail Group and the ABC,
continue to promote public scepticism
that nothing much has changed and
more is yet to come.
This is why Rodwell said accountability
was a key focus for APRA to ensure
that the right drivers for lasting
organisational change were adopted:
”
As a result, Boards are probing senior
executive teams harder, and demanding
clearer and more detailed board
reporting, to ensure that the misconduct
identified at other companies doesn’t
occur at home. Said Rodwell:
“Boards are ultimately responsible
– and therefore accountable – for
the performance of their companies,
executives and employees, and the
outcomes they deliver to consumers.”
It’s a tricky balance to achieve, given the
majority of Directors are non-executive
and therefore not able to be, or should
be, dealing with the minutia of detail,
or managing the company or becoming,
to use governance parlance, “an
operational Board”.
Within this environment of greater
pressure on Boards and senior
leadership teams, as well as expected
ongoing regulatory change, it would
be natural for executives to feel
overwhelmed and worried that the
right information wasn’t being brought
to the Board.
Perhaps it would be useful to reflect
on another famous Royal Commission,
presided over by Justice Neville Owen
into the collapse of HIH Insurance.
Justice Owen’s erudite, three-volume
report should be essential reading for
all Directors, CEOs and CFOs despite
being published 17 years ago.
Though he drew on a range of
philosophical schools of thought,
Justice Owen’s report is best
remembered for his Socratic question:
Did anyone ask:
‘is this right?’.
CFOMagazine.com.au
