In yet another amazing innovation from the Australian Securities Regulator ASIC:
inserting a psychologist in the boardrooms of some of the country’s biggest companies.
According to ASIC Commission John Price:
“Questions we will consider include: How are directors and officers ensuring that they know enough about the entity to ask the right questions? How do they know what they are not being told?
“How are they holding their executive teams to account? In large, complex entities, how do they ensure that they have meaningful oversight of all material non-financial risks of the entity?
“How are they satisfied that the compliance and risk functions of the entity are being adequately funded?”
There was a famous organisational behaviour study many moons ago. The study was trying to see the effect of different levels of light brightness on productivity. The study had people in white coats with clipboards walking around offices to see what was going on.
In the end, it was worked out that it was the presence of the observers rather than the lighting that affected productivity.
What will happen when an ASIC agent sits in a board room to see how directors and executives review and manage risk? Directors and executives will basically take no risk. And thus big business will become a quasi public service. Or perhaps more of a quasi public service.
TAFKAS waits for the annual general meeting where the Chairman of Westpac declares they will increase spending by 15% and when asked about profit, will repeat the line about increasing spending by 15%.
Who comes up with this insanity because we will all pay for it.