Composition, Independence, Representation, Codes of Conduct and Culture

This Chap. 29 examines board composition, independence, representation, codes of conduct and culture. We begin with board composition, the independence proportion and representation and examine greater challenge, debate and testing. We move to consider a change in board culture and codes of conduct/ethics and conflicts including changing board culture and ‘tone at the top’. We present governance variables for culture and ‘tone at the top’, ‘entrenchment’ of the CEO, codes of conduct and ethics including an ‘ethics, compliance and reputation committee’ and a conflicts of interest policy. There follows the FSB’s Framework for Assessing Risk Culture including the aims of assessing risk culture, the FSB’s elements of a sound risk culture including the FSB’s and NAB’s ‘tone from the top’. We continue with the FSB’s further indicators of a sound risk culture – accountability, effective communication and challenge and incentives. There is then focus on the FSRC findings on governance, remuneration and culture including the FSRC Final Report recommendations and commentary on culture, governance and on the role of the board and concluding that section with the FSRC Final Report recommendations and commentary on priorities. The examination then moves to the NAB Self-Assessment 2018 on financial objectives and prioritisation including strategic planning and performance objectives, the growth fund and annual group budget, trade-offs in decision-making and customer outcomes. Switching to the Westpac Review Team 2018 examination of prioritisation decisions, we examine WBC’s four (4) factors contributing to prioritisation of financial considerations. We conclude with the FSRC Final Report recommendations and commentary on non-financial risks and accountability.