A sound risk culture has been integral to Macquarie’s risk management framework since inception. Primary responsibility for risk management at Macquarie, including risk culture, is at the business level. The Boards, assisted by the Board Risk Committees, are responsible for forming a view on Macquarie’s risk culture and the extent to which it supports the ability of Macquarie to operate consistently within its risk appetite. The Board also identifies and monitors any desirable actions to change the risk culture.
Macquarie’s approach to maintaining an appropriate risk culture is based on the following three components:
Senior Management, with oversight from the Boards, set behavioural expectations. The way we fulfil Macquarie’s purpose is defined by our principles of What We Stand For: Opportunity, Accountability and Integrity. Staff are made aware that these principles must form the basis of all behaviours and actions. These behavioural expectations are specified in the Board approved Code of Conduct, which is actively promoted by management and cascaded through the organisation.
Management implements behavioural expectations through:
Macquarie monitors and measures its risk culture to gauge its effectiveness while promoting continuous improvement. Mechanisms include:
These mechanisms facilitate a feedback loop of sharing good practice and lessons learnt to enable cultural alignment.
The Board considers that the effective alignment of remuneration with prudent risk-taking is fundamental to Macquarie’s remuneration approach. Risk considerations are embedded throughout the remuneration process, including through the determination of individual profit share allocations, business group and company-wide profit share pools, as well as through the way in which remuneration is structured and delivered. Effective consequence management is a key component of Macquarie’s risk culture. Macquarie aims to apply consequences for non-compliance in a timely manner, and as fairly and consistently as possible.