Bank conduct and culture report is a reminder for all boards
Yesterday’s report on bank conduct and culture by the Financial Markets Authority and Reserve Bank of New Zealand has again highlighted governance of conduct risks, says Institute of Directors chief executive Kirsten Patterson. Conduct risks are the risks of how people behave.
“Our 2017 Director Sentiment Survey found just under half (44%) of New Zealand company boards had assessed organisational ethics risks, and less than a third (32%) of boards had discussed how they could make whistleblowing and speak-up provisions more effective in their organisations.
“We moved this year to highlight culture and ethics as one of our key educational themes. The Institute of Directors is committed long term to driving excellence and high standards in governance.”
Kirsten Patterson said the Institute was pleased the New Zealand banking report found no widespread misconduct or poor culture issues but that the weaknesses identified needed to be addressed immediately, as the reports’ authors had stressed.
“All boards have a core role in overseeing corporate culture, conduct risk and setting high standards of ethical behaviour. They need to think beyond compliance, take the lead and set the tone.
“Boards should ensure there is an effective culture of whistleblowing, and comprehensive and timely reporting from management. Boards should ask themselves what information and reporting tools they need from senior managers to ensure conduct risk is managed. This will include measuring customer complaints.”
Conduct risk such as fraud, corruption, bribery and unethical behaviour can cause significant financial and reputational damage.
“By building good conduct into their business models, boards will focus on long-term sustainability, good customer and shareholder outcomes, and a healthy culture for staff.”
Institute of Directors – Chris Wilson M: 021 0525 300 E: firstname.lastname@example.orgW: www.iod.org.nz
IoD is a non-partisan voluntary membership organisation committed to driving excellence in governance. It represents about 9000 members drawn from listed issuers, large private organisations, small and medium enterprises, state sector and not-for-profit organisations and charities.