Insights learnt from APRA’s Risk Culture Survey

On 10 November 2022, APRA released the results from their most recent risk culture survey. The survey was provided to 18 authorised deposit-taking institutions (ADIs) between October and December 2021. The 18 ADIs comprised the five largest banks (Major ADIs) and 13 smaller entities, consisting of regional banks, foreign bank subsidiaries/branches, mutual banks, credit unions and building societies (Other ADIs). The survey invited all employees in these selected institutions to share their views on their organisation’s risk management practices and culture.

The aim of this survey was to assist APRA in expanding its understanding of the risks and behaviours of ADIs and the effectiveness of APRA’s risk management practices within participating entities and across the industry.

Key risk culture survey insights

For most of the surveyed ADIs, there was a clear correlation between the survey’s results and APRA’s supervisory experience of those entities.

In summary, APRA identified five key risk culture survey insights:

1. Executives are overconfident regarding their entity’s risk management capabilities;
2. Risk management practices vary widely;
3. Executives are prone to blind spots;
4. Risk management roles and responsibilities require future clarity;
5. Executives and individual contributors experience decision-making and constructive challenges differently.

How will APRA use the risk culture survey’s results?

APRA’s report highlights that the takeaways from the risk culture survey only portray one set of data points from these ADIs at a single point in time. These survey results cannot be viewed in isolation to determine an ADIs risk culture. APRA’s view is that entities should examine these results in conjunction with other data points, such as internal risk culture reviews/assessments and other risk management metrics, to create a more well-rounded and fulsome perspective of an entity’s risk culture.

If you found this insight article useful and you would like to subscribe to Gadens’ updates, click here.

Authored by:

Matthew Bode, Partner
Chloe Parsons-Pope, Law Clerk