Any institution operating in the community has a chance of engaging with vulnerable people. While all children are vulnerable to a greater or lesser extent, adults may experience vulnerability due to factors such as age, illness, trauma, disability or their financial position.
The role of governance in protecting vulnerable people from harm is critical.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Financial Services Royal Commission) has heard evidence about a range of alleged misconduct by financial institutions, some of which concerns harm to vulnerable people.
Among other things, evidence has suggested that remuneration structures within financial institutions have incentivised selling products and services in a way that conflicted with customer interests, ultimately resulting in financial harm. The impact of remuneration and incentive structures on culture is well-documented, and the consequences for business can be significant.
One of the more challenging forms of harm to address is financial abuse.
Financial abuse occurs when someone misuses money or assets without the owner’s knowledge or consent. It can happen to anyone, but vulnerable people are generally more at risk.
Transactions that may be ordinary and legitimate in the vast majority of cases could be a form of financial abuse, depending on the circumstances. For example, an elder might have a genuine reason for transferring money to their adult child, or this could be the result of an exploitative relationship.
The Australian Bankers’ Association industry guideline on Protecting vulnerable customers from potential financial abuse outlines a number of steps banks can take to prevent financial abuse. These include activities such as staff training, risk assessment and appropriate third party authorisations.
Harms against the person
Institutions may be involved in many forms of harm, but none are more unconscionable than the sexual abuse of a child.
In December last year, the Royal Commission into Institutional Reponses to Child Sexual Abuse (Child Abuse Royal Commission) handed down its Final Report (Report), bringing five years of inquiry to a close.
Its findings revealed that too often governance structures have failed to protect children from harm. In its many case studies, a pattern emerged of failures in reporting and record keeping, risk management and, a lack of understating of the impact of incidents on victims and their families.
Through its recommendations, the Report underscored the importance of leadership, governance and culture in protecting children from harm.
The core message of the Report for directors is that child safe organisations can only be created as a result of deliberate and strategic action at the board level. All boards that work with children should pause to reflect on whether their organisation provides a safe physical and online environment for children.
A culture of safety
One way to focus on protecting vulnerable people from harm is through placing a strong emphasis on the importance of safety in organisational culture.
This approach is well-established in industries such as mining, construction and manufacturing where high risk operations are part-and-parcel of doing business. In these industries, safety is generally a standing board agenda item and is often strongly linked to remuneration.
Workplace health and safety is highly regulated and the consequences of accidents in this space can be devastating. It is no surprise then that safety is embedded in the culture of these sectors and, consequentially, that workplace accidents have been in decline for the past decade.
Developing awareness of safety in sectors that do not operate in such obviously high-risk environments may be more challenging. To position safety as a dominant feature in organisational culture, a more expansive view must be taken. This should include a broader range of safety issues as well as a more developed understanding of the people involved, encompassing issues such as vulnerability.
At the heart of this challenge, boards must be prepared to confront the reality that their staff, customers and stakeholders may be vulnerable and accept an appropriate degree of responsibility for their safety.
Boards should be satisfied that the safety of vulnerable people is recognised through adequate governance structures. Part of the board’s role in this work is to identify these levers and to use them to instil an appropriate culture. In doing so, safety should be embedded in strategy, risk management and performance incentive frameworks.
For most organisations, the levers that influence culture will be dispersed across a range of systems and processes. In seeking to create a culture that provides for the safety of vulnerable people, boards should ask questions such as:
- What types of metrics are used to report on safety;
- How people are incentivised to behave safely;
- Whether there is an understanding of vulnerable stakeholders;
- How accountability for safety is distributed; and
- Whether safety is reflected in the organisation’s values and principles.
Where safety and success are intrinsically linked, a culture of safety can emerge for the benefit of business and of vulnerable people.