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Banks dangerously complacent on risk culture 

April 13, 2016

James Eyers, Financial Review

The Australian banking sector came through the global financial crisis relatively unscathed but its resilience also had a downside: it has left banks dangerously complacent about assessing shortcomings in their risk cultures. 

Complacency can be defined as "a mixture of laziness and self-delusion", Harrison Young told The Australian Financial Review's Banking & Wealth Summit last week. The chair of the Commonwealth Bank of Australia board's risk committee said an example would be a dentist's patient who thinks going for a check-up would be a waste of money as his teeth are fine – but also because he doesn't really want to know if he has a cavity. 

With culture inside Australia's banks a topic of national conversation in the wake of the Financial Review's summit, it's become clear the banks haven't wanted to go to the dentist on culture. But now their neglect has created a hole that requires a filling, and the procedure could be painful. 

The Australian Securities and Investment Commission's cases against Westpac Banking Corp and ANZ Banking Group for allegedly manipulating the key benchmark interest rate, and revelations by The Sydney Morning Herald and The Age that Commonwealth Bank of Australia mistreated its financial planning and life insurance customers, has provided the burning platform that will lead to a prolonged period of introspection across the banking sector. Read more

 

 
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