Risk management

    Risk culture

    A sound risk culture has been integral to Macquarie’s risk management framework since inception. Macquarie sets, promotes, monitors and reflects on the effectiveness of our risk culture. All staff have a role in managing risk. Ownership of risk, 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. The Board also identifies and monitors any necessary or desirable actions to change the risk culture.

    Macquarie’s approach to maintaining a sound risk culture is based on three components:

    Remuneration and consequence management

    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. 

    Conduct risk 

    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:

    • breaches of laws or regulations
    • disregard for Macquarie’s principles of What We Stand For or the Code of Conduct
    • negligence and/or a lack of reasonable care and diligence
    • failure to escalate improper conduct
    • inadequate product design and distribution.

    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 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:

    • new and emerging conduct risks are identified through the annual strategy and business planning process
    • conduct risks that may arise when Macquarie establishes a new business or product, or makes a significant change to an existing business, product, process or system are identified and assessed through the new business and product approval process
    • independent monitoring and surveillance conducted by RMG, in addition to front line supervisory activities performed by the business
    • the Risk and Control Self-assessment requires businesses to identify and assess their key conduct risks
    • supporting the efficient operation of markets through appropriate controls and monitoring
    • where incidents occur, businesses investigate the underlying contributing behaviours and are responsible for recording all conduct related issues and incidents in Macquarie’s Governance, Risk and Compliance system, and escalating within the set timeframes 
    • performance-based remuneration reflects an individual’s performance, which is assessed against a range of financial and non-financial factors including approach to risk management and compliance
    • an Integrity Office that is an independent point of contact for staff to safely raise concerns about misconduct, unethical behaviour or breaches of the Code of Conduct, and protects those who raise concerns under Macquarie’s Whistleblower Policy
    • a global Staff Hotline for staff who wish to speak up anonymously
    • a Customer Advocate Office (ANZ only) to promote fair and reasonable customer complaint outcomes and to review and assist with determining escalated customer complaints.