Analysis of Corporate Responsibility and Governance at AMP Limited

This report provides a detailed analysis of corporate responsibility and governance, focusing on AMP Limited, an Australian financial services company. It examines the company's adherence to governance standards, its responses to the Royal Commission, and the risks it faces from regulatory bodies like ASIC. The report explores AMP's ventures into foreign markets, specifically the Middle East/North Africa region, and outlines steps for convincing stakeholders of the benefits of expansion. Furthermore, it delves into ethical considerations, discussing how employees can uphold ethical standards, protect the company's reputation, and maintain stakeholder trust through accurate financial reporting and ethical leadership. The report also identifies potential risks AMP may face over the next 3-5 years, including breaches of corporation acts and failures to adhere to ASIC regulations.

Running head: CORPORATE RESPONSIBILITY AND GOVERNANCE 1
Corporate Responsibility and Governance
By (Your Name)
Name of the Institution

CORPORATE RESPONSIBILITY AND GORVERNANCE 2
Corporate Responsibility and Governance
Question One
AMP is one of the biggest insurance and financial advisor companies in Australia. It
works as a company of wealth management in Australia, New Zealand and also globally. It runs
its roles through six sections which are wealth, protection, capital, bank, New Zealand mature
and financial services. AMP limited provides financial advice and investment services.
AMP questions the principles of raising the standards of governance by the royal
commission due to the fact that Commonwealth Bank of Australia demonstrated that those
standards were un-protective to companies which had adopted them. AMP limited board of
directors do not strictly adhere to the principles of governance because they question the ability
of those standards to make their internal controls effective and stronger for example the board
can cross-examine the CFO and their auditor without the presence of the chairman and the chief
executive officer.
AMP limited management gives too much focus on non-primary issues. The company
board do not have adequate time to debate over significant strategic issues. According to the
chairman Mr. Murray, adherence to the standards does not reduce company governance failures.
AMP chairman criticizes the structure of the committee which does not guarantee stronger
results. The financial system governance schedules of AMP are ineffective and this has been
contributed by the regulators who try to minimize the separation of executive directors from the
non- executive directors.
The board directors responded to the key stakeholders by rethinking about the board
structure. The board of directors also suggested that there should be separation of roles of

CORPORATE RESPONSIBILITY AND GORVERNANCE 3
executive and non -executive directors. The above issues lead to the appointment of Francesco
De Ferrari as new CEO of AMP.
Question Two.
The royal commission implements new laws to financial advisers and lenders, this may
force customers to go to unregulated banks, this act may make it difficult for AMP to offer
financial advice to its customers and therefore it will bring threats in terms of competition. The
royal commission also shifted the responsibility of borrowers to financial institutions and this
will render AMP limited not able to recover its whole receivables and the company may end up
being bankrupt. AMP may also face systematic risks in the financial sector due to the moral
hazard created by the royal commission. Due to introduction of the royal commission AMP
limited has the risk of facing cultural and ethical mistakes in every part of the company
management. AMP also uses deception while responding to their mistakes, the investigation
disclosures that the royal commission conducts may make the company to suffer from poor
brand reputation.
Identify Risks that this Company May Now Face Over the next 3 to 5 years
The risks that AMP limited may face from the ASIC closer scrutiny and compliance
comprise of the following. The risk of breaching the corporation acts through provision of wrong
information hence misleading the ASIC deliberately and materially. AMP suffers the risk of
facing charges from ASIC corporation acts over the information they produce in their financial
statements. AMP may face the risk of committing a criminal offence by breaching the 64th
section of the ASIC act. AMP may suffere the risk of facing charges for its financial planners’
failure to adhere to interest duties and the ASIC corporation acts. The financial planners of AMP

CORPORATE RESPONSIBILITY AND GORVERNANCE 4
earn high commissions by advising their clients to submit new insurance applications instead of
transferring their previous insurance contracts and subsequently the planners break the ASIC
acts. ASIC may also file charges against AMP limited for the misconduct of charging fees for no
services offered. AMP limited also produces misleading statements to ASIC and it may,
therefore, face charges for not complying with the regulations involved while reporting to ASIC.
ASIC acts requires that the CEO and managers to be answerable to its engagement with
companies, contrary, AMP limited uses the lower level managers to conduct ASIC engagement
and this may make the company to be sued. AMP limited also has poor risk operational
management and it interferes with the independence of their auditors, this is against ASIC rules
and this may make the company to face more charges from ASIC.
Question Three.
Steps for Venturing into Foreign Markets
According to Ishikawa and Horiuchi, (2012), there are ten procedures involved in
venturing to foreign markets. First is developing a game plan through coming up with strategies
to help venture into global markets. The second step is classifying the specific products that will
be sold in the new foreign markets. Next involves developing a primary guide that will help in
exports. The next step involves conducting market analysis through research using secondary
information. Then estimate the prospective size your market will take in the target market
(Middle East/North Africa). The next step involves evaluating the level of competition in the
target foreign country market. Research about the new markets regulation and other information
concerning the packaging of products. After doing the above use trade fairs in testing the markets
of our products. The next step is to set realistic goals by starting in markets with few entry

CORPORATE RESPONSIBILITY AND GORVERNANCE 5
barriers. Lastly, leverage free materials from the government like counselling before starting a
new business.
How to Convince the Other Three Directors
Middle East/ North Africa have favorable commodity prices in what the three companies
will offer and this may act as a key driver for sustainable growth for the three companies. Middle
East/North Africa have shown consistent growth over the past few years and have wealthy per
capita income which will necessitate to a sustainable future. Lastly, Middle East/North Africa
have a remarkable infrastructure which provides a good and well-developed communication
strategy to both the investors and the common residents. These infrastructures are subsidized by
their governments which make it affordable and convenient and in return guarantees a
sustainable future.
Question Four.
In every company, good reputation and getting the trust of stakeholders is very key.
According to Gavai (2010), in order to protect the reputation of a company and increase its trust
by stakeholders, an employee should make sure that the financial statements are faithfully
represented by including all material information. In this case as an employee, in order to
maintain ethical position, I would advise the management to adhere to ethics by honestly
evaluating the resources and reporting on the capping replacement as this will give the true
picture of the company’s performance and this will help it to set good internal controls that will
make the company achieve its goals.
Discussing with the management about the significance of adherence and compliance of
ethic programs. Reporting the replacement of the capping equipment will help the company to

CORPORATE RESPONSIBILITY AND GORVERNANCE 6
build integrity which will inspire all workers of the company to observe work ethics. The other
thing I will do is to advise the other directors on the importance of upholding ethics because
leaders set the tone of culture in every organization. If leaders assume their ethical responsibility
that will be the culture that the employees will adopt which might end up compromising with the
company’s reputation by providing misleading information to external users and managers.
Leaders should be the pioneers of ethics and those people who did not list the capping machinery
should be held responsible and accountable for violating the company’s ethical standards.

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References
Gavai, A. K. (2010). Business ethics. Mumbai [India: Himalaya Pub. House.
Ishikawa, J., & Horiuchi, E. (2012). Strategic Foreign Direct Investment in Vertically Related
Markets*. Economic Record, 88(281), 229-242. doi:10.1111/j.1475-4932.2012.00796.x