ANZ Banking Group’s former chief risk officer said widespread risk management failures at banks leave the country vulnerable to an economic downturn.
Mark Lawrence, a veteran risk consultant and ANZ’s top risk executive from 1999 to 2004, said most local banks are nearly a decade behind international peers transforming risk capabilities and fixing cultures, because until the Hayne royal commission there had not been a “burning platform” to stir reform like the 2008 financial crisis did overseas.
Violations exposed by the royal commission should not simply be viewed as isolated conduct breaches, Mr Lawrence said, but it was plausible the risk management weaknesses extended to other areas, including credit risk. He said he was concerned the shortcomings will limit the abilities of banks to understand and respond effectively to any future crisis.
“I am worried about our vulnerability to a major economic downturn and have concerns about the quality and effectiveness of the risk management capability in most, if not all of our major banks,” he said.
“My genuine worry is we’ve gone 27 years since the last economic downturn and the conduct issues will pale into insignificance if there is…
