Risk Management Group
Risk Management Group (RMG) functions include Credit; Prudential, Capital and Markets; Market Risk; Quantitative Applications; Operational Risk; Compliance; Behavioural Risk, Enterprise Support and Internal Audit.
Credit Risk assesses, approves and monitors material credit risk and equity risk undertaken by Macquarie.
Prudential, Capital and Markets (PCM) confirms that Macquarie discharges its prudential regulatory obligations, and maintains a constructive relationship with the regulator. PCM also measures aggregate risk across all risk types relative to Macquarie’s economic capacity to bear risk.
Market Risk quantifies and constrains Macquarie’s exposure to adverse movements in market rates and volatility.
Quantitative Applications Division (QAD) manages model risk in Macquarie's models used for derivative pricing, capital calculation and credit provisioning.
Operational Risk applies the Operational Risk Management Framework to identify, assess and manage the risks arising from failures of people, processes, systems and external events.
Compliance enables business management to fulfil their supervisory responsibilities by establishing an effective and robust compliance framework. A significant number of Compliance staff are co-located with the business and confirm that day-to-day compliance obligations are discharged at the business level.
Behavioural Risk provides expertise and oversight on risk culture and conduct risk, environmental and social risk, and work health and safety.
Enterprise Support drives and supports the strategy and the effective and efficient operation of RMG.
Internal Audit provides independent and objective risk-based assurance on compliance with, and effectiveness of Macquarie’s financial and risk management framework.
RMG’s oversight of risk is based on the following five principles:
- Independence: RMG is independent of Macquarie’s Operating and Central Service Groups. The Head of RMG, as Macquarie’s Chief Risk Officer, reports directly to the Chief Executive Officer with a secondary reporting line to the Board Risk Committee. RMG approval is required for all material risk acceptance decisions.
- Centralised prudential management: RMG’s responsibility covers the whole of Macquarie. It assesses risks from a Macquarie-wide perspective and provides a consistent approach across the Group.
- Approval of all new business activities: The Operating and Central Service Groups cannot undertake new businesses or activities, offer new products, enter new markets, or undertake significant projects without first consulting RMG. RMG reviews and assesses the risks and sets prudential limits. Where appropriate, these limits are approved by the Executive Committee and the Board.
- Continuous assessment: RMG continually reviews risks to account for changes in market circumstances and developments within Macquarie’s business.
- Frequent monitoring and reporting: The risk profile of Macquarie with respect to all material risks is monitored by RMG on an ongoing basis. Centralised systems exist to allow RMG to monitor financial risks daily. Reporting on all material risks is provided to Senior Management and the Board.