Chief Risk Officer, ANZ
Growing up in Mount Gambier, a small town on the border of South Australia and Victoria, ANZ Non-Executive Director Graeme Liebelt certainly never envisaged a career as a CEO and board member. In a recent chat with ANZ Chief Risk Officer Kevin Corbally, Graeme reflected on the experiences that brought him to the bank, what he thinks it takes to be a leader and the future focuses for the board.
Kevin Corbally: Graeme, would you mind sharing with us how a boy from Mount Gambier ends up on the board of ANZ, the Chair of a number of other public companies and the former CEO of a publically-listed company?
Graeme Liebelt: I get this question a little bit because Mount Gambier is a small town most people don’t know about. If everybody came to town at the same time it might be 30,000 people!
“Our ability to add value has been a real eye-opener. I think there is plenty of opportunity for us to add even more value to the bank.” – Graeme Liebelt
The single most important thing was that my parents valued education. We were not a wealthy family – Dad was a middle-ranking public servant in the Department of Agriculture and Mum was a secretary for a while who then retired from paid work when she got married and had children.
However, my parents made a point of making whatever sacrifices were necessary for us to get a good education. We moved to Adelaide for the sake of the education of myself and my siblings and that’s probably the single most important decision they made.
Of course, there are lots of other small decisions we make in our careers that take us down a particular path. I came out of university and started life as an academic but I made a decision to get some business experience and moved to Melbourne with my then wife on the promise of being only two years, of course.
When we moved to Melbourne I joined Shell and that ended up being a critical decision in where my career has ended up. Had I not made that decision, I might have ended up as a career academic like my brother. These small decisions along the way have big ramifications.
The main thing is to work according to a clear set of values. I’ve always tried to work hard, to do the right thing, to treat people with respect. I’ve tried to understand strengths and weaknesses and maintain a certain amount of humility and gratitude. Luckily, things have worked out well.
I suppose the other thing is good luck. I certainly never set out with a plan to be CEO of a public company from the age of 10. It was never like that but things worked out and I’m very fortunate.
KC: Looking back at your career, what do you see as the most important things a leader needs to be successful?
GL: When you go into the role of leader, it’s no longer about you being the smartest person in the room. It’s no longer about the expertise that you bring to the world. It’s completely about how you get the best out of the people working for you and with you.
And that’s a big change, actually. In the early days of my corporate career, I was accustomed to being highly regarded with respect to my ability in what was then marketing and strategy, and thought to be smart and valued for those things. Then, the revelation was put in front of me: that’s fine but you’ll never get that much more out of yourself in comparison with getting a great deal more out of the people working with you.
So, you need to reconceptualise your role. Obviously don’t lose expertise and experience, which is so valuable, but begin to think about what it is you need to get the best out of people. That is the whole range, leaving them enough space to make decisions and occasionally failing.
That’s my biggest single piece of advice: think about how to get the most out of other people. Don’t lose the other things but create the right environment for your people to grow and get on. The other thing to say is when you see somebody really grow in that environment, it’s the most rewarding thing in the world, I reckon.
KC: Recognising that, and giving others the opportunity – and not having to assume you know the answer to everything – I think is critical. I agree totally. Companies and regulators are very focused on culture at the moment, so can you share your thoughts about risk culture and how ANZ is positioned in that regard?
GL: Culture is the topic of the year in corporate circles – not just risk culture, but culture generally. It’s understandable because we’ve seen some fairly significant failures and it’s become the way of looking at failure these days. Just about any big failure is described as being a failure of culture.
This means we have to think very seriously about what culture is and how it looks. Regulators, of course, are pushing us down this path as well but it’s not a focus just because regulators are pushing us. We need to find out and think through what this really means for us and how we can use it to improve our operations, going forward.
Culture, ultimately, comes down to the way in which we, as an organisation, encourage the right set of behaviours. We have to define the desired risk culture for our organisation. I think it’s going to be defined around our five risk principles. The sort of culture we want is one that embeds those principles and people behave according to those principles.
The reason culture is important, as a board and the leadership team, is it gives us confidence our people will do the right thing most of the time or at least what they see as the right thing, most of the time. I think that’s a very important and powerful thing.
KC: What are some of the key things the ANZ board is focused on? What are the things keeping you awake at night and personally focusing on?
GL: If you go back a few months, the adjustment to the pandemic was really front and centre – a primary concern for all of us. The challenge of keeping people safe, getting people working from home, with all of the risk challenges that that entailed, particularly for the risk function, was paramount.
ANZ has also reviewed our lending – as at 30 September (2020) we had re-rated more than 90 per cent of our Institutional loan book and more than 80 per cent of all of the commercial businesses in Australia and New Zealand – and there’s been all the work on providing and analysing customer loan deferrals and all the follow-up for that work – including extensive use of data.
There have been two revelations in this: our ability to adjust so quickly to working from home, where we had to work hard and in a focused manner to get the technology platform right, is one. The other is the ability to use data effectively, to have meaningful conversations around things like spending and saving patterns with customers, the government, regulators, and just to give us a degree of confidence while working through the challenges.
On top of that, there’s all the work we’ve done on stress testing, provisioning and continuity plans. Our ability to use stress testing for decision-making and to have the risk function hand-in-glove with the frontline business has been vital. Our ability to add value has been a real eye-opener. I think there is plenty of opportunity for us to add even more value to the bank.
We also need to continue our focus on remediation and compliance. We’re making good progress with remediation – though there’s still an awful lot to be done – including simplifying our processes and continuing our remediation with customers.
The dream is to have compliance as something perfectly routine and that management of operational risk just becomes part of the way we do things every day.
What the risk function then does is help the business take good risks. At the end of the day, we’re a risk-taking organisation – we generate value for our customers and the community by taking those risks. Our ability to use data effectively and our ability to use modelling effectively – for decision-making and to understand the customer better – gives us a great opportunity to help the bank take the right risks.
KC: What role does the board have in addressing issues like climate change?
GL: The board looks beyond the politics and ideology of climate change to look at it as a risk that needs to be managed. I think it’s important, from the board point of view, that as a bank we manage our reputational risk and indeed financial risk in relation to these types of customers. But also that we maintain a very high degree of respect for their challenges as well. We’ve been very pleased to work with our customers and maintain those relationships and, where we see issues with those customers, try and work on transitional plans together.
KC: When comparing your board role at ANZ to other non-bank boards you sit on, what is different or uniquely challenging about the governance role in a bank?
GL: It’s quite different actually. A bank is a unique institution given the nature of the regulatory environment. It’s the nature of our role in the economy and the function of a financial system, making sure an economy is operating well.
The consequence, of course, is we do spend more time in relation to governance issues and spend much more time with regulators as board members. At Amcor (where I am Chairman) we have regulators of course but I spend less time on it. On the bank’s board, you spend quite a lot of time on regulatory matters.
Kevin Corbally is Chief Risk Officer at ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.