The Banking Executive Accountability Regime (BEAR) is a relatively new regulatory initiative introduced for major Australian banks in July 2018, and then for all other deposit-taking institutions in July 2019.
The BEAR should ultimately produce better risk management outcomes, such as fewer unexpected losses, fewer regulatory sanctions, and higher risk-adjusted performance. But it will take several years to fully evaluate BEAR in terms of these outcomes. Better outcomes rely on a significant change in managerial practices, and without these changes, better risk management outcomes are unlikely to eventuate. We propose, therefore, a research project designed to investigate how the introduction of BEAR affects risk management practices.
Using qualitative research methods (interviews and analysis of documents) we will:
• Determine whether BEAR is effective in making executive accountability more salient;
• Identify the impact of executive accountability regulations on organisational structures, job descriptions, risk appetite, role clarity, investment in new risk-related resources/systems, training programs, risk reporting, focus on non-financial risks, managerial supervision of delegated activities, managerial responsiveness to ‘bad news’ and risk culture (i.e. the behavioural norms relating to risk management); and
• Identify potential adverse consequences of new regulations such as resentment, workplace stress, loss of talent, manipulation of accountabilities, misuse of resources and loss of collegiality/cooperation.