Uncertain event risk mapping framework(s) related to case organization

Legislation, Theory, Corporate Governance Principles or Guidelines related to case organization 3

Introduction

Governance and management roles

The Westpac board consists of six board committees that oversee the business and they are responsible for approving and overseeing management’s implementation of the strategy and business plan of the Westpac Group, approving the Group’s risk management framework, risk management strategy and risk appetite statement, and monitoring the effectiveness of risk management by the Westpac Group. The board delegates to the CEO and he/she delegates to the executive team, and they are responsible for the day-to-day management of Westpac. The key functions of the board, CEO and the executive are listed according to the guidelines issued by the ASX corporate governance principles. (WESTPAC GROUP 2020 CORPORATE GOVERNANCE STATEMENT, 2020,21)

The case of both money laundering and child trafficking has not adhered to many laws and principles and guidelines laid out by the government and appropriate agencies. The anti money laundering law and the counter terrorism financing act (2006) was formed to keep a check on financial institutions that handle cross border money movements. This act requires the financial institutions to report certain transactions. With regards to the federal government’s department of home affairs requires the business to maintain database and systems to monitor for money laundering and terrorism financing risk, verify the customers thoroughly, accurate maintenance of records and report any suspicious transaction. The AUSTRAC — the Australian Transaction Reports and Analysis Centre, is responsible for enforcing and overseeing these requirements to evade any possible terrorism activity. Westpac bank failed to follow these laws and guidelines laid out by them hence exposing them to risks. (Janda, 2020)

Committees, external auditor, company secretary responsibilities for risks

Financial and non-financial risks

The Westpac scandal has made the company vulnerable or prone to many risks. Westpac’s non-financial risks were immature and reactive. Some of the non- financial risks that the company faced due to the scandal are the following –

Sustainability – sustainability refers to the company balancing out the opportunities and managing risks that benefit the company in the long term. The company failed to do so by not assessing the risk properly well ahead and ignored even after the warning was given. The company also didn’t look into its long term goals while doing so. (Tsintsadze, Glonti, Oniani and Ghoghoberidze, 2019,101)

Complexity in the organizational structure
The non financial risk in the company was immature and a reactive risk culture.

Board risk awareness impacts on conformance and performance

Conclusion

Through this report on the Westpac scandal it is very evident what happens when an organization is not following the rules and regulations of the laws pertaining to that particular industry. This report has showed how the scandal made Westpac pay $1.3 billion civil penalty. This report also explained how the board members ignorance led to the scandal. The report also has an analysis s to how the company reached this stage and what helped them to reach the position.

Recommendations

The bank has been very negligent with risk management and its affects. The company has failed to comply with the rules and regulations of various laws. This means that the company and its top management were not successful in following through with the policies and procedures laid out for risk management. It showed the board members inefficiency. In order to change that the following recommendations are made-

Conduct evaluation of the process as often as possible and make changes then and there.

One of the main reasons for the scandal was complexity in the organizational structure, hence that should be changed into a simpler one to avoid further issues.

References

Tsintsadze, A., Glonti, V., Oniani, L. and Ghoghoberidze, T., 2019. Empirical Analysis of Financial and Non-Financial Risks of the Commercial Bank. European Journal of Sustainable Development, [online] 8(2), p.101. Available at: http://ecsdev.org/ojs/index.php/ejsd/article/view/797 [Accessed 27 June 2021].

WESTPAC BANKING CORPORATION, 2020. WESTPAC GROUP 2020 CORPORATE GOVERNANCE STATEMENT. [online] Available at: https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/WBC_Corporate_Governance_Statement_2020.pdf [Accessed 27 June 2021].

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