Risk Management Behaviours Program
A case study about creating a superior risk management culture
(Click here for a video overview of the program and commentary from program facilitatiors and senior management)
NAB Wholesale Banking (NAB-WB), a division of National Australian Bank, aims to develop a superior risk management culture. To do this, NAB-WB has partnered with BTS to develop a “Risk Management Behaviours Program” that challenges its employees’ risk awareness, risk assessment and risk-related behaviours. The program’s primary aim is to create a “risk savvy” culture that drives business results and increases shareholder return via higher employee engagement and improved risk awareness and business acumen.
Because of an unfortunate 2004 FX event, NAB-WB was forced to identify culture as a potential threat to its risk management implementation and strategy. Consequently, before the program’s onset, NAB-WB had already begun to identify the guiding principles that would define its desired culture. As a result, NAB WB’s cultural “BluePrint” model was born. The BluePrint aims to define NAB WB’s desired culture, especially around the five key principles of collaboration, accountability, innovation, customer focus & adaptability – or in other words “how the bank does business.”
As new sources of risk (e.g. terrorism), greater interdependencies (Butterfly Effects) and more unknowns emerge (BlackSwans) globally, the NAB Group seeks to expand Wholesale’s cultural Blueprint to the broader group. To do this, the NAB Group has created the Purpose and Enterprise Behaviours that will continue the Bank’s move from a policy driven risk culture to a principles-based decisions culture, which identifies threats, but also seizes opportunities and, perhaps most importantly, learns from its mistakes.
A Highly Customized Development
BTS interviewed over 50 key executives and management to gain a deep understanding of NAB WB’s desired risk behaviours and how those behaviours should align to its “BluePrint” model. This enabled the BTS team to develop a highly customized, risk behaviours simulation. The computerized, scenario based simulation allows NAB-WB the opportunity to reinforce the “BluePrint” model to all its employees, while also interactively challenging its staff to address issues of leadership, risk management (credit, market, operational & reputational) & cultural alignment. >
Additionally, through its in-depth customization approach, BTS has been able to illustrate how NAB WB’s strategic objectives may be affected by individual employee behaviours. This helps the participants understand how their individual behaviours and decisions affect the strategic execution of the bank, the bank’s capital use and the bank’s ability to meet its financial and shareholder objectives.
The Solution – A Risk & Cultural Alignment Experience
Prior to delivering the Risk Management Behaviours Program, BTS engaged in Train-the-Trainer sessions with approximately 100 NAB-WB Managing Directors globally. This was an important part of the process because the Managing Directors are heavily involved in the facilitation of the program. Additionally, this gave BTS the opportunity to ensure the highest quality program and to guarantee that the program was fully supported by management across the NAB-WB global footprint.
The objectives of the program for participants are:
- Gain a shared understanding of how to manage risk within NAB – role of individual and the bank
- Reinforce a principles based approach to decision making, looking closer at the cultural “BluePrint”
- Gain acceptance that risk management is everyone’s responsibility – an individual’s mindset to risk is a part of defining the company’s risk culture
- Use scenario based learning to have fun and introduce challenges in all aspects of risk management (i.e. operational, market, credit, technology, etc.)
The duration of the program is 1 day. The participants are required to make decisions based upon different risk scenarios (operational, system, credit, market, etc.) that their teams encounter and that simulate possible real events which could occur in the banking industry. The teams make multiple judgments regarding risk and engage (with the facilitator’s help) in high quality discussions as to why and how decisions are made. During each of the two simulated rounds, the risk scenarios increase in intensity, causing participants to struggle with risk identification and assessment while building on their learning experience.
The Team-based Approach
BTS will deliver the program to 2,500 NAB-WB employees globally (Australia, NZ, UK, HK & US). The program will be delivered separately in each region. This enables the participants to work in their natural geographic leadership teams, while communicating the desired NAB-WB risk culture globally. At the end of each program, all participants will receive accreditation by the NAB Learning Academy and will commit to individual action plans that are focused on the learning objectives of the program and their specific regional challenges. These objectives will align to the desired corporate and risk management objectives for the geographical regions and are designed to deliver superior shareholder return globally.