Actuaries Institute has released a new paper identifying what it takes for organisations to overcome the shortcomings revealed by the royal commission and the 2018 report from the Australian Prudential Regulation Authority.
The paper noted two major failings exposed in the inquiry and the APRA report: individual and collective greed that puts self-interest and the interests of shareholders ahead of customers, and a reliance on regulation and process to encourage and enforce the right conduct.
Andrew Brown, specialist consulting actuary, said organisations would need to adapt to rapidly changing community expectations and take a holistic approach to evolving better corporate culture – or the failings will continue.
“Organisations must have positive values that are embedded in day-to-day behaviour,” Brown said. “They should resist overly complex and bureaucratic decision-making processes, and reflection and questioning must be embedded in the culture.”
To effectively manage risks, organisations must have the ability to see issues from various perspectives and maintain ethical standards despite adversity; ways of working that allow groups to solve complex challenges; and systems, processes, and structures that reinforce best behaviour, the paper said.
The paper also said organisations must understand the consequences of the ways in which employees think and behave; focus on building an environment where learning and responsibility are encouraged; enable intrinsic motivation; review traditional incentives, rewards, and recognition; and enable cultures that recognise and enable individual, group, and organisational change.
“As organisations become more aware of the impact of their actions on key stakeholders, they begin to see how these impacts affect their brand, reputation and ultimately, their own success,” the institute said.
Brown said evolving the right culture takes a long-term commitment and a “great deal of adaptive ability, from both individuals and teams.”
Visit the Actuaries Institute website to access the full paper.