Institute of Directors responds to 'complacency' revealed in this week's regulator report
The Institute of Directors has highlighted the results of its November 2018 Director Sentiment Survey in light of this week’s regulator report, and says that ethical risks need to become the focus of all boards across the country.
The November survey found that 55% of New Zealand boards took ethical risks into account – up from 44% the previous year. According to Chief Executive Kirsten Patterson, boards now need to think beyond mere compliance and ‘take the lead’ in restoring trust in financial services.
“The Institute of Directors has highlighted culture and conduct as one of the top five issues for directors in 2019, and it was one of our key educational themes last year,” Patterson stated. “While [the 44% to 55%] increase is a positive development, more focus is still needed by boards across New Zealand.”
“The life insurance report stresses how conduct directly affects customers and can result in a loss of trust and confidence in an industry. It finds that most boards of life insurers had not given any serious thought to conduct and culture prior to this review.”
Patterson says boards need to make sure they’re receiving regular reports from senior management to monitor risks of corruption, fraud, bribery and unethical behaviour. She says they need to “have a finger on the pulse of the organisation” to avoid any potential reputational damage that is likely to occur if these risks go unchecked.
“All boards have a core role in overseeing corporate culture, conduct risk and setting high standards of ethical behaviour,” she said. “They need to think beyond compliance, take the lead and set the tone. By building good conduct into their business models, boards will focus on long-term sustainability, good customer and shareholder outcomes, and a healthy culture for staff.
“The Institute of Directors is committed long term to driving excellence and high standards in governance.”
