Introduction and operations of NAB

Introduction and operations of NAB
National Australia Bank is one of the largest banks operating in Australia. The bank
was formed in 1982 as National Commercial Banking Corporation of Australia
Limited and is listed on the Australian Stock Exchange. The company operates in
the geographies of Australia, New Zealand and Asia and employs more than 35000
people. The bank was ranked 21st in terms of market capitalization and 49th in terms
of total assets in the entire world in the year 2016 (Alexander, 2016). The company is
growing big and large in its operations and has around 1600 branches and 4500
ATMs and serves around 13 Mn customers worldwide. The main operations of the
bank are divided into 8 divisions which are business banking, personal banking,
UBank, MLC & NAB Private Wealth, NZ Banking, Wholesale banking, specialized
Group Assets and other corporate functions. It mainly deals in
1. Business and private banking with priority customers being small and
medium businesses and the investors.
2. Consumer banking and the Wealth division which provides customers with
the independent advisors, mortgage brokers, etc.
3. Corporate and Institutional banking which deals in lending and transactional
products and services relating to financial and debt market, specialized
capital, custody and alternative investments (Arnott, et al., 2017).
4. New Zealand banking which further comprises of consumer banking, wealth,
corporate and insurance verticals.
Three major potential risks having impact on audit
In any organization or banks, there are risk involved even if the books of accounts
are maintained properly. We shall discuss the major risks involved in the NBA
herewith.
Risks involved are:
Credit Risk:
This risk has a very negative impact on the financial position of the company. This
risk even hampers the reputation of the Group as a whole. Credit risk refers to the
inability that a consumer will fail to repay the debt and will not be able to fulfill the
obligations with respect to the agreement and its terms towards the Group. There
are a lot of factors that may lead to the credit risk, i.e. decrease in the price of the
residential properties, decrease in the number of employees, loss of employment,
etc. Climatic changes also may lead to credit risk that because of severe climatic
conditions, may affect the business and its operations (Goldmann, 2016).
Compliance and Conduct Risk:
This risk refers to those involved due to lack of knowledge regarding the rules and
regulations, laws, compliances, industry codes of conducts, the specific policies as
well as frameworks, etc. This risk leads to a very bad impact on the monetary
position as well as reputation of the Group. Whereas the conduct risk refer to the