ANZ’s ‘complacency’ and ‘reluctance to challenge’ raised by McKinsey’s review
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The news: An independent review by McKinsey into ANZ has given a damning report of the big four bank’s culture and risk management.
The context: Published by ANZ on Friday afternoon, the bank’s ‘Root cause analysis’ outlined six key causes and behavioural drivers of shortcomings in ANZ’s non-financial risk (NFR) management practices and risk culture relating to NFR. ANZ said it lags behind its peers in these areas.
The report observed a reluctance to challenge and deliver bad news and focus on maintaining a “good news culture” can mask problems and prevent decision makers from recognising risks or fully understanding issues.
McKinsey flagged ANZ’s “insularity and lack of curiosity” and its “lack of responsiveness”, leading to problems persisting over long periods of time to become complex and challenging to resolve.
The report goes on to note that these behaviours were exacerbated by insufficient leadership role modelling and an insufficient recognition in the value of NFR management for customer, risk and business outcomes. Criticising the firm’s lack of execution discipline, the report said: “Projects are stood up quickly at ANZ, but they are often left unfinished as teams and funding are reallocated before outcomes are achieved and sustained”
The report said a “stronger ‘tone from the top’ to inspire the right behaviours” is needed at the lender.
ANZ hired McKinsey in June to undertake the review after a series of failures led to a $240 million fine and crackdown from the Australian Prudential Regulation Authority (APRA). In April, APRA raised ANZ’s capital add-on from $750 million to $1 billion amid ongoing risk management practices and culture concerns, including weaknesses in the bank’s operational risk and compliance management and a reactive risk culture.
The source: ANZ
