19 October 2016
Sydney, 18 October 2016: The Australian Bankers’ Association has welcomed today’s release of an information paper by the Australian Prudential Regulation Authority on the risk culture of financial institutions.
“A lender’s risk culture impacts every decision it makes and is the cornerstone of a stable financial system,” ABA Chief Executive Steven Münchenberg said.
“We welcome initiatives that help banks understand and manage their own risk culture, and we are pleased that APRA has noted an improvement in how directors focus on the risk culture in their organisation,” he said.
“It is important that the tone is set from the top and employees have a clear framework to make decisions that appropriately balance the potential gain with any potential loss.”
APRA’s paper looks at how different organisations approach risk culture and how this relates to company values. It also outlines APRA’s future plans to encourage institutions to focus on risk culture.
Mr Münchenberg said the ABA agreed on the need to build on the work that had already been done.
“There are many elements to a strong risk culture, including having clear business objectives, values and understanding of risk appetite.
“Banks recognise that demonstrating a strong risk culture will increase the public’s trust in the financial sector. We look forward to working with APRA on how risk culture can be strengthened to ensure banks have the right practices and behaviours,” he said.
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