While it has not been publicly naming and shaming, APRA has quietly been giving financial institutions a dressing down about their readiness for a crisis.
In his opening statement to the Senate Economics Legislation Committee this week, chair Wayne Byres emphasised the need for APRA and the financial services sector to increase the emphasis on being ready for new and emerging financial risks.
He referenced a speech to the Risk Management Institute of Australasia Annual Conference last month by APRA Executive Director, Policy and Advice, Renée Roberts, who called on industry leaders to “…have already thought seriously about possible crisis scenarios, come up with a credible plan and tested their ability to execute it.”
In her address, Ms Roberts further stated: “…relying on APRA or taxpayers to step in to solve the problem is not an acceptable strategy.
“Making it up on the spot or coming up with a plan and putting it on the shelf don’t cut it. We need leaders to face into this challenge, not view it as a compliance exercise. Leaders need to have thought seriously about financial stress scenarios, come up with a credible plan, and then tested their institution’s ability to execute this plan. If you are going to step up to the controls of one of our institutions, it is your responsibility to assure yourself that you can land it safely in the unlikely event of an emergency.”
But research by SenateSHJ tells us it is not just financial stress crises many of these institutions are ill-prepared for, most Australian companies are underprepared for a crisis of any kind.
Our 2020 Reputation Reality research paper found only 15% of directors and senior executives had confidence in their organisations’ ability to effectively carry out their crisis communication plan.
In fact, only 50% of those we surveyed had a crisis communication plan and of those that had one, only 18% tested them annually.
How organisations manage a crisis is crucial to their long-term reputation, yet little time and resource is being invested in preparing adequately.
If you cannot respond fast enough in a crisis you risk losing control of the agenda, being on the backfoot and you are likely to be harshly punished by stakeholders.
At SenateSHJ we know, from decades of crisis communication experience, clear communication and staying calm under pressure are the most important leadership attributes for a crisis management team.
Without the proper training, and the time and effort invested in crisis preparedness and crisis simulations, companies place their most valuable asset at risk – their reputation.