Company

Risk management

Macquarie’s approach to risk management is based on stable and robust core risk management principles.

Risk management principles

All staff have a role in managing risk

All staff throughout Macquarie are expected to manage risks in accordance with the risk management framework and foster an appropriate and effective risk culture.

Ownership of risk at the business level

Group Heads are responsible for ownership of material risks that arise in, or because of, their business operations, including identification, measurement, evaluation, monitoring, control and mitigation of these risks. Before making decisions, clear analysis of the risks is sought to ensure those decisions are consistent with the risk appetite and strategy of Macquarie.

Understanding worst-case outcomes

Macquarie’s risk management approach is based on examining the consequences of worst-case outcomes and determining whether these are acceptable and within Macquarie’s risk appetite. This approach is adopted for all material risk types and is often achieved by stress testing. Macquarie operates a number of sophisticated quantitative risk management processes, but the foundation of the approach is the informed consideration of both quantitative and qualitative inputs by experienced professionals.

Requirement for an independent sign-off by Risk Management Group (RMG)

Macquarie places significant importance on having a strong, independent risk management function to review, challenge and sign-off all material risk acceptance decisions. It is essential that RMG has the capability to do this effectively. RMG has invested in recruiting skilled professionals from a range of industries, including those with trading or advisory and capital markets experience. For all material proposals, RMG’s opinion must be sought at an early stage in the decision-making process. The approval document submitted to Senior Management must include independent input from RMG on risk and return.

Clear accountability for risk management

Macquarie’s approach to risk management adopts the ‘three lines of defence’ model, which sets risk ownership responsibilities functionally independent from oversight and assurance: 

  • primary responsibility for day-to-day risk management lies with the business. The risk owner is the first line of defence
  • RMG forms the second line of defence and provides independent and objective review and challenge, oversight, monitoring and reporting in relation to Macquarie’s material risks
  • The Internal Audit Division, as the third line, provides independent and objective risk-based assurance on the compliance with, and effectiveness of, Macquarie’s risk management framework.

Further information on the risk management framework

31 March 2026

2026 Full Year Risk Management Report

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Risk culture

Risk culture is foundational to risk management, supporting our ability to operate within risk appetite. Maintaining an appropriate and effective risk culture continues to be integral to Macquarie’s risk management framework. The Board, assisted by the Board Risk Committee, is responsible for forming a view of the risk culture within Macquarie and the extent to which it supports the ability of Macquarie to operate consistently within its risk appetite. Through its oversight, the Board can also identify necessary or desirable changes or focus areas required to strengthen the risk culture.

Learn more about risk culture at Macquarie

Risks we manage

Macquarie’s risk management framework is the totality of systems, structures, policies, processes and people within Macquarie that identify, measure, evaluate, monitor, report and control or mitigate all internal and external sources of material risk. Macquarie maintains a single risk management framework that is applied appropriately throughout the Operating and Central Service Groups.

In determining those risks that are material to Macquarie, we assess the potential for a risk to affect our earnings resilience and financial strength across market cycles, our ability to meet regulatory obligations, our stakeholders, and our reputation. Macquarie’s material risks include:

Macquarie owns physical assets for the purpose of generating a return. Asset risk arises from changes in the value of those physical assets.

The business is responsible for monitoring changes in asset value. RMG Credit and Financial Management, People and Engagement (FPE) provide independent review.

RMG Credit is responsible for reporting on asset risk to Senior Management, Board Committees and the Board.

The risk of behaviour, action or omission by individuals employed by, or on behalf of Macquarie, or who represent Macquarie or its business activities, and which may have a negative outcome for our clients, counterparties, the communities and markets in which we operate, our staff, or Macquarie.

Read more about conduct risk management at Macquarie.

 

The risk that a counterparty will fail to complete its contractual obligations when they fall due (default risk) or changes in the creditworthiness of the obligor (migration risk).

Our tolerance for credit risk is monitored through counterparty, portfolio, country1 and industry limits which are set in response to Macquarie’s business strategy and business needs.

The business owns credit risk arising from their activities. RMG Credit provides independent and objective review and challenge, oversight, monitoring and reporting on credit risk undertaken by Macquarie.
 

  1. Country risk – the risk of economic, political, and business environment conditions within a jurisdiction that could cause Macquarie to suffer financial loss.

The risk of legal, regulatory, reputational or financial impacts due to failure to identify or manage material environmental or social issues arising from or with respect to our investment, financing, client activities or supply chain. It includes the risk of breach of environmental obligations or internationally accepted human rights standards, and negative impacts (or perceived impacts) on the natural environment or communities of people.

Read more about sustainability at Macquarie.

The risk of a change in value of a Macquarie equity investment.

The business owns equity risk arising from their activities. For all material equity investments, RMG Credit is responsible for independently assessing material equity risk across the Group and for rating equity for the purposes of capital treatment.

All material equity risk positions are subject to approval by Senior Management and/or the Board, depending on the size and nature of the risk. The Board also delegates the discretion to approve equity exposures of a certain amount to designated individuals within Macquarie.

RMG Credit monitors the overall usage of the Equity Risk Limit (ERL), the upcoming transaction pipeline, and the portfolio composition.

The risk of knowingly or unknowingly perpetuating or helping parties to commit or to further potentially illegal activity through Macquarie. Financial crime risk encapsulates the risks of money laundering, terrorism financing, bribery and corruption, and non-compliance with sanctions.

All Operating and Central Service Groups are responsible for the management of financial crime risk arising from its activities. The RMG Financial Crime Risk (FCR) function manages and oversees financial crime risk, engages with regulators and maintains and monitors the effectiveness of global financial crime risk frameworks, programs and policies for Macquarie. RMG FCR reports regularly to Senior Management, Board Committees and the Board on Macquarie’s financial crime risk profile.

Legal risk is the risk of failure to comply with the law; or create, maintain, perform or enforce legal obligations, including the risk of failure to appropriately maintain and govern legal entities within the Group.

The Legal and Governance Group is responsible for legal risk management at Macquarie. This group supports each business at Macquarie in understanding the legal and regulatory framework it operates in and in managing its affairs within the framework.

The potential for adverse consequences which may arise from model errors or inappropriate use of modelled outputs. Failing to manage model risk could result in financial loss or negatively impact Macquarie’s prudential positions, competitive advantage and compliance with applicable laws or regulations.

A model is defined as a quantitative method, system or approach that applies statistical, economic, financial, or mathematical theories and techniques, and assumptions to process input data into output. Outputs are estimates, forecasts, predictions, or projections. Both inputs and outputs can be quantitative or qualitative.

The business owns the model risk arising from its activities. RMG Model Risk Management is responsible for the model risk management framework, independent and objective review and challenge, oversight and reporting, and functionally independent model validation.

The risk of a change in the value of Macquarie’s positions as a result of changes in market conditions.

The business owns market risk arising from their activities. RMG Market Risk is responsible for the market risk management framework and independent oversight of both Traded Market Risk and Interest Rate Risk in the Banking Book (IRRBB). This is supported by the calculation, monitoring and reporting of market risk capital and granular limit frameworks.

Risk of failure to manage internal processes, people, systems, data, records, models, service providers, change or external events.

Macquarie recognises that the potential for failure to manage internal process, people, systems, data, records, models, or from service providers, change or external events can give rise to material risk events and/or impacts.

The business owns operational risk arising from their business activities and is required to have controls and procedures in place to manage these risks. RMG Operational Risk is responsible for the independent oversight of operational risk.

The risk of failing to comply with laws, regulations, rules, statements of regulatory policy, and codes of conduct applicable to Macquarie’s financial services and other regulated activities.

The business is responsible for the regulatory and compliance risks arising from their activities, and must have adequate systems, processes and controls to manage these risks.

Macquarie, as a diverse global financial services company, is regulated and supervised by a significant number of regulators worldwide, and aims to maintain constructive, transparent engagement with them.

RMG Aggregate Risk & Prudential is responsible for developing and maintaining the framework to ensure Macquarie takes a consistent approach to managing regulatory engagements globally.

The risk of failure to comply with applicable tax laws, regulations or rulings, or failure to meet other revenue authority requirements or expectations. This includes any event, conduct, action, or inaction in tax strategy, operations, financial reporting or compliance that has the potential to either adversely affect Macquarie’s tax or business objectives or result in any unanticipated or unacceptable level of monetary, financial statement or reputational loss or exposure.

Oversight of tax risk is undertaken by Finance & Tax, a specialist division within FPE, which is independent of the business and takes an integrated view of tax risk for the Macquarie Group as a whole. Finance & Tax provides taxation support to all areas of the Group and manages Macquarie’s relationships with revenue authorities globally.

Risk of loss resulting from failure, inadequacy or misuse of technology and technology resources owned, managed or supplied by Macquarie including technology outsourced and/or managed on behalf of Macquarie.

The business owns technology risks arising from their activities. The business is required to have controls and procedures in place to manage technology failures. RMG Operational Risk is responsible for independent oversight of technology risk.

Risk of adverse outcomes arising from the development, deployment, and/or use of Artificial Intelligence (AI) systems within or supporting Macquarie Group. These risks may emerge from failures in AI design, implementation, governance or oversight, and can manifest across multiple risk types.

The risk of incidence of work-related injury, illness or disease or other events impacting health and safety of employees / contractor / visitors / members of the public and/or regulatory breach / failure or inspection by a health / safety regulator. This includes throughout our global operations and investment activities, where our ability to affect day-to-day operations can vary significantly.

Macquarie recognises, supports, and promotes the right of every worker to return home safely from their workplace. Accordingly, we are committed to our Work Health and Safety (WHS) vision of building and promoting safe and healthy workplaces which enable and empower people to do their best work. To achieve this, we build and maintain a safety-positive workplace culture and manage our WHS risks effectively.

The business owns WHS risk arising from their activities. RMG Operational Risk is responsible for the oversight of WHS risk management.

WHS risk is governed by the WHS Policy and associated standards, procedures and processes which provide detailed requirements for businesses to ensure consistent and effective management of WHS risk.

Escalation of incidents is the responsibility of the Business Group. RMG Operational Risk will coordinate Board reporting elements and seek input from the different Business Groups.

For further details refer to Global Work Health and Safety Policy - Extract

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