Risk management at Macquarie

Our approach to risk management at Macquarie is based on stable and effective core risk management principles. It is supported by our longstanding approach to establishing and maintaining an appropriate risk culture.

Our approach

The acceptance of risk is an integral part of Macquarie’s operations. Strong independent prudential management has been a key to Macquarie’s success and stability over many years. The assumption of risk is made within a calculated and controlled framework that assigns clear risk roles and responsibilities represented by ‘three lines of defence’.

The first line of defence is at the business level, where primary responsibility for risk management lies. Part of the role of all business managers throughout Macquarie is to ensure they manage risks appropriately. The Risk Management Group (RMG) forms the second line of defence and independently assesses all material risks. Internal Audit, as the third line, independently reviews the Group’s risk management controls, processes and systems.

Refer to the Risk Management Report in the Annual Report for details on the Risk Management Framework. Additional information is available through these links:

Risk culture and conduct risk management

Macquarie’s risk culture is well established

A sound risk culture has been integral to Macquarie’s risk management framework since inception. It is continuously being maintained and improved. The long-held foundations of Macquarie's risk culture are the principles of 
What We Stand For – Opportunity, Accountability, and Integrity.

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Risks we manage

The risk management framework incorporates active management and monitoring of a range of risks. They are listed below in alphabetical order.

Conduct risk

The risk of improper, unlawful, or unethical behaviour or action that may have a negative impact on Macquarie’s clients or counterparties or the fair and effective operation of the markets in which Macquarie operates.

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Credit risk

The risk of a counterparty failing to complete its contractual obligations when they fall due. 

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Cyber and information security risk

The risk of accidental or intentional unauthorised use, modification, disclosure or destruction of information resources, which compromises their confidentiality, integrity or availability.

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Data risk

The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events that impact the quality of data.

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Environmental and social risk

The risk of reputational or commercial impacts due to failure to identify or manage material environmental or social issues including labour and employment practices, human rights, resource efficiency, climate risk, pollution prevention, biodiversity and cultural heritage.

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Equity risk

The risk of loss arising from banking book equity and equity like exposures.

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Legal risk

The risk of loss arising from actual or perceived breaches of law and regulation and the risk of loss when enforcing contractual or legal relationships.

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Liquidity risk

The risk that Macquarie is unable to meet its financial obligations as and when they fall due.

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Market risk

The risk of adverse changes in the value of Macquarie’s trading or banking portfolios from changes in market prices or volatility.

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Model risk

The risk of loss incurred from relying on outputs from models that are inadequately developed, validated, implemented, used and/or interpreted, or governed.

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Operational risk

Macquarie defines operational risk as the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events.

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Regulatory and compliance risk

The risk of legal or regulatory sanctions, material financial loss, or loss to reputation Macquarie may suffer as a result of its failure to comply with laws, regulations, rules, statements of regulatory policy, and codes of conduct applicable to its business activities (not including operational risk failures).

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Reputation risk

The risk of loss arising from negative perceptions held by customers, shareholders, counterparties, regulators, market analysts, other relevant parties - including government bodies - and the broader community.

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Tax risk

Tax risk can be defined as any event, action or inaction in tax strategy, operations, financial reporting or compliance that either adversely affects Macquarie Group Limited (MGL)’s tax or business objectives or results in an unanticipated or unacceptable level of monetary, financial statement or reputational loss or exposure.

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What We Stand For

Three principles guide our approach: Opportunity, Accountability and Integrity.

Corporate Governance

Learn about our corporate governance.

Environmental, Social & Governance

Learn about our environmental, social and governance (ESG) commitment.