At a number of points during the Financial Services Royal Commission the Commissioner commented on the lack of a root cause analysis of regulatory breaches by regulators and businesses, leading to remediation without requiring changes to the business itself.

A root cause analysis is usually conducted by a team with the results graphically displayed in a fishbone diagram showing detail of all of the possible causes related to a problem. 

The analysis focuses on the content of the problem, not its history or differing personal interests. Everyone must first agree on the problem statement. The analysis focuses on causes not symptoms. It can either start with steps in a process or major causes.

For a service problem analysis the major categories could start with Policies, Procedures, Resources and People then asking why each of these could cause the problem.

When a regulatory breach is identified, remediation is not complete without the cause of the problem being identified and policies and procedures changed to ensure the problem is not repeated.

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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.