How would your Organisation go with a Self-Assessment?
APRA last week imposed a punitive $500m in additional capital requirements for ANZ, NAB and Westpac, a stinging response to the self-assessments carried out by the respective banks.
With interest rate cuts already creating strong headwinds for bank revenue targets, these additional capital requirements will impact returns for the banks even harder. Executives within will surely be looking to remediate the shortcomings in the self-assessments in a timely fashion.
Although the self-assessment was only carried out by 36 entities, the findings will no doubt permeate throughout all Financial Service entities. With APRA enhancing its supervision of risk management, including its “constructively tough enforcement appetite”, these capital impacts will no doubt play out across the industry in the form of additional operational risk capital requirements. The additional scrutiny APRA have started to apply over risk management within organisation’s will also see individuals held to account. This report on the back of the prudential inquiry into CBA, clearly provides a heads up for all entities to get on the front foot when it comes to reviewing their risk management processes and systems.
So, what were the common themes in the self-assessments?
The findings should not come as a surprise to anyone who has been in the Financial Services Industry for some time. There underlies a common language in the findings that most would resonate with:
Two of the fundamental drivers in this space are the:
- Resource gaps in compliance
- Under investment in systems
- Blurred lines of accountability between divisions
- Propensity for short-term tactical fixes rather than long-term strategic solutions resulting in rectification that is not always effective, with issues subsequently recurring.
- Reactive management only on the back of regulatory scrutiny
- Legacy system constraints and inability to adequate analyse data
- Insufficient data, reporting and oversight
The primary driver for all of this? An issue all boards and executives will recognise, short term results focus driving priorities of resources that leaves control gaps.
The Royal Commission is certainly leading to this behavior being turned on its head, with APRA clearly mandating investment in a company’s control environment should be top and centre for Boards and their Executive. No longer will these gaps be allowed to persist over time, rather an active program of risk resolution, enhancement to non-financial risk management processes and systems, cultural change with improved communication and leadership, will; be an absolute minimum APRA will be expecting from entities moving forward.
CoreBIS, Cortell’s award winning governance platform, provides mitigation against these common themes uncovered in the self-assessment report findings. Data gaps and legacy core systems are addressed by CoreBIS’ underlying Business Intelligence engine, which can connect to any source system, extracting data through its proprietary ETL layer, allowing organisations the transparency over data extracts and transformations that take place.
This data can further be augmented with plain English business rules and supported by validation controls that ensure accuracy in reported data. These important features allow organisations to meet regulatory requirements, even in the face of system changes and or inorganic growth which often present significant system and data architectural change.
CoreBIS drives the delivery of clear lines of accountability with its audit features, supporting organisations meet existing and impending BEAR accountabilities. The audit and compliance control synergies that CoreBIS drive often support operational cost saving for compliance reporting, meaning the cost hurdle should no longer be one faced by Executive teams. All of this is also provided within a platform that is sustainable into the future as regulatory changes happen including standard business reporting, meaning there is now no excuses for Executive teams not to sign up to CoreBIS and meet the challenges that APRA are bringing their way.
About Cortell Australia
Cortell is a Business Performance Management practice who helps customers improve visibility, transparency, accuracy and efficiency for all aspects of the business reporting cycle.
Recently, Cortell was awarded both the IBM Global Business Partner of the Year for Analytics and SaaS Innovation Partner of the Year for its CoreBIS APRA Governance Platform. Take a revolutionary step forward with your compliance and reporting function, talk to a CoreBIS specialist at Cortell today.