A sound risk culture has been integral to Macquarie’s risk management framework since inception. Primary responsibility for risk management in Macquarie, including risk culture, is at the business level. The Board, assisted by the Board Risk Committee, is 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, and monitoring the identification of, and actions taken to address, any desirable changes to 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 Board, sets 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.
Macquarie defines conduct risk as the risk of behaviour, action or omission by individuals employed by, or on behalf of, Macquarie or taken collectively in representing Macquarie that may have a negative outcome for our clients, counterparties, the communities and markets in which we operate, our staff, or Macquarie.
Such behaviours, actions or omissions may include:
Conduct risk can arise inadvertently or deliberately in any of Macquarie’s Operating and Central Service Groups.
Macquarie’s approach to conduct risk management is integrated in our risk management framework and is consistent with our three lines of defence model. Risk-taking must be consistent with Macquarie’s Purpose, Macquarie’s principles of What We Stand For and the Board approved Code of Conduct.
Macquarie has a range of controls and processes in place to identify and manage conduct risk, including: