Risk Management of Private Companies
Senator VAN: Secretary, is it right to say that, longstanding, both in practice and in corporations law, the boards of Australian companies are the ones that should be running risk management on their supply chains and what they do?
Mr Pezzullo: Boards have particular responsibilities, under the corporations legislation, across the governance of the entirety of the entities that they oversee. Certain matters are delegated to management; I think that's well understood. If you're asking the question, 'Where does the principal burden for risk management sit within a private corporation?', it sits with the company. I hope that I'm not pre-empting a follow-up question, but the NCM adds value if the sum total of each company and sector, operating in its own commercial interests and according to its own continuity and risk management arrangements, is less than what the nation needs. There are very particular arrangements. One example—that's not in relation to the more recent food supply chain issues—is that at the start of the pandemic, each of the companies said to us through the supermarket supply chain arrangements that the NCM set up, 'We can only go so far, and then we get into regulatory hurdles such as after-hours noise regulations from councils that affect the ability of our large trucks to go through streets.' A company can only take its engagement with those issues so far before it puts its hand up and says, 'If someone could deal with the municipal regulations collectively, all of us could supply food more quickly by restocking through the back of those shops, if our trucks could go in through the night.' Another very brief example, which I'm fairly certain I've given on evidence before, is that when even discussions about collaboration in supply start to give rise to cartel considerations under the law overseen by the ACCC, the value to the entity is that it can say, 'Look, we can engage with the ACCC, with Chairman Sims and his senior officers. What discretion is lawfully available under the relevant legislation?' The NCM's role is not to do the job of the companies but to address those gaps where aggregator or synchronised effort, on top of all the companies doing the best they can, gives you more benefit.
Senator VAN: Thank you, Secretary; you not only pre-empted my follow-up question, you improved on it
Mr Pezzullo: I do apologise; I didn't mean to.
Senator VAN: No, please, I appreciate the breadth and depth of your answer. Thank you.
