Insights – Rhizome

RiskMinds International 2025: reimagining risk practices

The most sobering observation from RiskMinds International 2025 wasn’t the escalation of geopolitical tensions or the relentless march of agentic AI. It was in the opening address when Lord Darroch noted ‘we’re in the most unpredictable and chaotic situation in a generation’. Yet most risk functions are responding by automating processes designed for a world that no longer exists. Annual risk limit review and setting. Static control frameworks. Pretty dashboards. Risk-type siloes that miss the compounding effects of interconnected threats. The uncomfortable truth is that the tools we’ve relied on for a generation are increasingly inadequate for the velocity of change we now face.

Conflicts, construction and concealed dangers: a critical look at ASIC’s private credit review

The recently published ASIC report (named REP-814 Private Credit in Australia) on private credit authored by Nigel Williams and Richard Timbs represents a landmark regulatory assessment of the sector, examining operational practices, conflicts of interest, fee structures, and valuation methodologies across the market. We have been closely monitoring the private credit sector and the ASIC report provides important validation of our concerns that that have been building for years. However, while the report identifies critical issues requiring attention, it also reveals gaps in understanding of the deeper structural vulnerabilities that could emerge when the credit cycle turns. This article compares observations in ASIC’s report with Rhizome’s research, highlighting areas that should also be considered and were not covered in the scope of ASIC’s review.

Unlisted, unrated and illiquid: is private credit really understood?

In today’s dynamic financial landscape, private credit has emerged as a pivotal component of the investment ecosystem. As traditional banks retreat from certain lending markets, private credit funds have stepped in to fill the void, offering tailored financing solutions to a diverse range of borrowers. However, the success of these investments’ hinges on rigorous credit analysis and disciplined investment approaches. Rhizome explores 5 key lessons in private credit lending.

Leading a mutual bank – the toughest job in banking?

Soaring consumer expectations, ever-expanding regulatory demands and an increasingly unpredictable economic environment. In many ways, running a mutual is an unenviable position. Mutuals do not have the fat margins enjoyed by the majors to enable them to throw money at talent, at technology, at risk management. to retain the advantages inherent in the mutual model, a long-term view is necessary. Investing in risk management and governance now will not only prevent the kinds of failures or errors that can be devastating to a smaller institution, but will improve efficiency and reduce costs over the longer term. At Rhizome, we see four key, interrelated areas where mutuals can invest now to see outsized future gains

Driving success in risk remediation programs

It is increasingly clear to us that many so-called risk uplift programs fail to demonstrate tangible and effective outcomes. But is it the case that like Tolstoy’s unhappy families, all risk uplift programs fail in their own way, while successful programs are all alike? Perhaps not identical, but we think there are a number of key elements of an uplift program that are more likely to lead to success.

Risk in focus: what’s on our mind?

It is clear that the financial sector is grappling with a series of heightened risks. Most pressing are the political and geo-political shifts, the rise and rise of generative artificial intelligence and cybercrime, and the increase in scams and fraud. As these risks intersect with regulatory priorities, including an appetite for executive accountability, an increased interest in governance, and a low tolerance for failures to fix problems, we see 2025 as continuing to be a challenging year for the industry. In this environment, it is essential for entities to focus on those things that are within their control, and to really prioritise getting the basics right.

What’s reasonable? Reasonable steps in practice

It’s an ordinary Tuesday afternoon, when, picking up emails between meetings, the bad news comes in – there has been a serious issue in your business line. Details are not fully known yet, but it’s probably a breach and goes back quite some time. The corporate crisis management processes are already kicking in, but your mind turns to your own individual accountability. This isn’t the first time something has gone wrong, but now not only is your bonus and your job at risk, so is your future in the industry. Could you be disqualified for this major failure?

You start mentally walking backwards through the cascade of events and decisions that led to this outcome – something obviously went wrong somewhere – but had the organisation, had you, taken reasonable steps to prevent it, and, importantly, can you prove it?

Culture, conduct and the Kabuki theatre

Perfect policies and promises of GRC systems won’t get you the risk and customer outcomes you want. We lift the curtain on culture theatre.

A harder focus on hardship

Regulators are closely scrutinising how financial firms respond to customers facing difficulty – whether in hardship applications or collections activities; whether conduct towards the customer, forecasting and modeling or in their analysis and systems for predicting and reporting for non-performing loans. Getting it wrong is not only a compliance risk, but an enormous reputational risk.

With that in mind, based on our experiences we pose a series of questions we think all leaders should consider.

Embedding resilience: beyond CPS 230

At first glance, Prudential Standard CPS230: Operational Risk Management might have seemed the same as other regulatory change initiatives, a new requirement and another task to add to the pile. But savvy firms are capitalising on this as an opportunity to transform their operations and leap frog competitors by using it as a strategic and competitive advantage.

Governance 2.0: proposed changes to CPS 510 and your need to know

In its discussion paper released on 6 March 2025, APRA proposes an overhaul of prudential standards for governance. Although not yet finalised, and with a relatively long lead time – there is an expectation that a new prudential standard will commence in 2028 – it is worthwhile for financial institutions to expeditiously consider both the implications of the changes, and also the impetus for the changes.

Stability through liquidity: changes to APS 210

In November 2023, APRA commenced consultation on proposed changes to Prudential Standard APS 210 Liquidity, designed in response to the lessons learned from events in early 2023 – most notably the March 2023 collapse of SVB. The proposals set out fundamental changes to the Minimum Liquidity Holdings (MLH) regime and in their current form, have significant impacts for ADIs operating under the MLH regime. All MLH ADIs need to closely analyse the costs and operational impacts of these proposals and start preparing now for the inevitable transition to a more complex, and specific regulatory regime.

A 3LOD reality check

Most financial institutions have adopted the three lines of defence risk management system. History has shown that it has not prevented the occurrence of risk failures since its emergence. In theory, it sounds like a relatively simple concept – in practice, it has been difficult to implement and embed.

Unlisted, unrated and illiquid: is private credit really understood?

Managing the risks of unlisted asset valuations

Prudential Practice Guide SPG 530 Investment Governance (SPG 530) has been finalised. Importantly, there are a series of key actions that boards and management need to take, especially with APRA’s thematic review uncovering a considerable number of existing inadequacies and highlighting the centrality of board responsibility in addressing these issues.

Private credit: the biggest risk is looking back

Explore private credit as an asset class and the imminent risks and opportunities it presents.

A closer look at greenwashing

With all eyes on greenwashing, it is worthwhile taking a closer look at the details of the three court actions ASIC has initiated, to help other firms understand and address greenwashing risks before they too raise the ire of the corporate regulator. How well are emerging risks being integrated with risk management frameworks and what should you look out for?

FAR: a journey begins with a single (reasonable) step

After three iterations and much debate, the 2023 FAR Bill finally passed in September 2023 and takes effect for RSE licensees and insurers from March 2025. Although it seems like a relatively long lead time (on top of an even longer build up), experience with the predecessor Banking Executive Accountability Regime (‘BEAR’) suggests that such a fundamental shift in how entities and executives are expected to behave takes significant time and energy to implement. For super fund trustees, the time for action is now.

Commercial property risks – sector in focus

‘[A] potentially vulnerable sector globally’

That’s how the Bank of England described commercial property in its March 2023 Financial Policy Committee meeting. Heightened risks are now receiving heightened attention. How resilient are commercial property loan portfolios in a scenario where there is yield expansion and a tenancy recession (lower rental income) combined with higher interest rates? In this Risk Insights we cover:

The data dilemma
Segments matter
Portfolio management
Turning data and insights into opportunity

Commercial property: maximising opportunity through effective risk management

There is considerable uncertainty about the financial position of small businesses which have been hardest hit by the pandemic and the flow-on impacts for income producing property. Additionally, the pandemic has accelerated changes in the structural demand for office and retail space.

Lenders with rich data and sophisticated portfolio management practices will be better positioned to navigate through this period of uncertainty – able to quickly identify opportunities to strategically adjust underwriting standards, policies and portfolio allocations with the requisite clarity and confidence.

Lessons from Archegos – the risk management failures at Credit Suisse

Credit Suisse’s report provides important insights about how risk management practices failed and how the identified weaknesses are being remediated.

Boards and executives should use the report to reflect and challenge themselves about the way risks are being managed in their own organisations – going deeper than surface-level observations to understand what’s really happening in practice.

Managing higher risk portfolios: DTI in focus

APRA highlights its expectation that ADIs are appropriately pre-positioned to be able to control growth and the composition of lending, if needed. In this Rhizome Risk Insight Article, we explore what you need to consider in managing high debt to income (DTI) portfolios.