Is Your Decision-Making Process Putting You at Risk?

Hall Advisory
12 minutes ago
8 min read

Learn how structured decision-making strengthens governance and accountability. This article explains why frameworks help leaders in regulated organisations make confident, defensible decisions that meet ASIC, APRA and FAR expectations — reducing risk and protecting both organisational reputation and individual accountability.

Key takeaways:

1. Poor organisational decisions can lead to legal, financial, and reputational harm.

2. Clear, structured decision-making supports compliance and accountability.

3. Documented processes protect both organisations and individuals.

4. Frameworks like RAPID and DARE can improve clarity and speed.

5. Empowered decision-making increases confidence and drives better outcomes.

Every organisation runs on decisions. Some move you forward. Others land you in front of a regulator.

The quality of those decisions shapes culture, performance, and accountability. A strong decision-making process does more than improve outcomes — it builds trust inside and outside the organisation.

Regulator expectations are rising in Australia. The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) are focusing more on how boards and executives make and document their decisions. The Financial Accountability Regime (FAR) adds another layer of scrutiny, making decision quality both a key compliance and performance issue.

Recent corporate failures show us what happens when this discipline slips. Several superannuation fund collapses exposed gaps in trustee due diligence, oversight, and documentation. These are costly lessons in how poor decision-making can damage an organisation’s reputation and put member funds at risk.

As regulators watch more closely, organisational decisions can no longer be made casually or undocumented. In this article, we’ll discuss both the consequences of poor decision-making and the benefits of structured decision-making.

Why is decision-making so important?

Timely, quality decision making is critical to business success, it is now a regulatory expectation, not just a best-practice ideal.

ASIC and APRA have made it clear that “box-ticking” governance isn’t enough. Organisations must demonstrate that decisions are considered, documented, and defensible.

Under FAR, boards and executives can face personal accountability for their decisions. Regulators or courts may review decisions, so transparency and traceability are essential. That means if a decision in your area of responsibility goes wrong, you personally may face civil penalties up to around $1.6 million. Even well-intentioned leaders can face serious consequences when unable to demonstrate reasonable diligence and rationale for decisions taken.

In today’s environment, leaders must be able to show not only what was decided but how and why. Deliberate, documented decisions aren’t bureaucracy — they’re protection, efficiency, and good governance in practice. But good decision-making looks different depending on the nature of the decision. We’ll explore that next.

What are the different types of organisational decisions?

Not all decisions are created equal. Some are instinctively in day-to-day operations, while others require deeper analysis and formal approval. What matters most is clarity – knowing what level of governance and documentation each type of decision demands.

Organisational decisions sit on a spectrum, from routine to strategic. Each requires a different level of scrutiny, input and oversight:

Routine decisions – Everyday operational choices the follow established procedures or policies. Examples include approving marketing materials, authorising expense claims, or standard product updates.
Significant operational or tactical decisions – Mid-level decisions that carry more weight but may not reach board level. These include structural changes, large transactions, major supplier selections, or product launches with material financial or compliance implications.
Strategic decisions – Long-term, high-impact decisions that shape the organisation’s direction or reputation. Examples include mergers, partnerships, major investments, or new market entries.
Incident, remediation and crisis decisions – Responses to compliance breaches, risks, or unexpected events that can fall anywhere on the decision-making spectrum. Organisations can manage minor operational incidents through predefined processes, while customer remediation or major crises require co-ordinated, senior-level decision-making. .

Matching the process, documentation and level of oversight to the significance of each decision is essential. Routine matters should move efficiently through defined processes, while higher-impact or high-risk decisions need structured analysis, clear accountability, and documented rationale.

Routine decisions

Routine decisions benefit from streamlined procedures that are efficient and effective, to support timely decisions making with sufficient documentation.

For routine decisions like approving standard marketing materials, you might use a checklist: Does it meet brand guidelines? Does it comply with advertising regulations? If yes to both, the marketing manager approves. Done.

High impact decisions

Strategic or remediation decisions often require additional time with deeper analysis, consultation, and more documentation. Taking the time to make a sound decision earlier in the process can help increase efficiency later down the track. The idea is to find the appropriate balance and flexibility.

Consider a company deciding to replace its core business system. With pressure to modernise quickly, there's temptation to fast-track the decision once a suitable vendor is identified – skipping detailed process mapping because, "We'll adapt our workflows to the new system."

However, taking time to do it properly results in smoother implementation and better adoption. From thoroughly mapping current processes and involving key users from different departments, to testing compatibility with existing systems, and planning the change management approach. The upfront investment prevents months of operational disruption, expensive customisations, and frustrated staff working around system limitations.

Without defined processes and procedures, certain actions can undermine decision-making and result in serious consequences.

What common mistakes undermine decision-making?

Even experienced teams can fall into traps that weaken governance and slow outcomes.

Common issues include:

Unclear ownership – confusion about who holds authority to decide.
Conflicts of interest – failing to identify or manage situations where personal or organisational interests overlap.
Analysis paralysis – spending so long assessing options that momentum is lost.
Lack of due diligence – not spending enough time or resources looking into the potential impacts of a decision.
Not engaging stakeholders – insufficient communication with the potentially affected parties or those who represent their interests.
Informal approvals – decisions made over email or in meetings without clear documentation.

Each of these decision-making issues erodes confidence and accountability. They also increase the risk of reputational harm from poor decisions — particularly when regulators or auditors request evidence of how a decision was reached.

Good governance frameworks and processes prevent these issues by making roles, steps, and records explicit from the outset. Unfortunately, we’ve seen these issues play out on the public stage in Australia, with recent cases in financial services under the spotlight.

Case studies: When decision-making fails

History offers plenty of reminders of why structure matters when making decisions. Two recent cases show us the consequences of unclear decision-making.

a. The Shield and First Guardian Story

When trustee-managed super funds Shield and First Guardian collapsed, subsequent regulatorly investigations revealed major gaps in governance and decision-making processes.

Reports indicate that trustees approved key investments without sufficient documented analysis or due diligence. Certain risk indicators were not fully explored, and potential conflicts of interest were not clearly assessed or recorded.

ASIC has stated that, based on the information available at the time, platform trustees should have exercised greater caution before agreeing to host the Shield and First Guardian funds. Though the funds were flagged as high risk and illiquid, they weren’t labelled as such, and the responsible entities lacked track records.

Examples cited in the regulator’s case filings illustrate the consequences of informal or incomplete processes:

Reliance on unrelated or irrelevant external analysis rather than forming a trustee opinion and conducting internal analysis.
Limited documentation confirming formal authorisation of the approval decision.
Insufficient analysis of material conflicts, including common directors/shareholders between the responsible entity and investment manager.

Emails later referenced in proceedings suggest that some approvals were recorded informally rather than through formal governance channels. The result? Around 11,000 investors were affected, with approximately $1.2 billion of retirement savings at risk.

APRA is now calling for trustees, especially those managing platform superannuation products, to strengthen governance, oversight and member protections.

b. The ASX CHESS replacement project

The Australian Stock Exchange’s (ASX) attempt to replace its CHESS clearing and settlement system using blockchain technology became a cautionary tale.

ASX committed early to a blockchain-based solution for its core clearing and settlement system, despite blockchain's immaturity and untested scalability at the required level. The decision wasn’t sufficiently stress-tested — an error in technological risk assessment.

Because testing wasn’t rigorous from the outset, by the time the ASX detected scalability, performance, and integration it was too late. The organisation addressed problems reactively rather than through proactive risk management and scenario testing.

The project’s governance structures were opaque, with a lack of clear accountability and independent assurance. Oversight mechanisms were ineffective, so significant issues remained unaddressed for years. Despite internal warnings about technical and integration risks, decisions continued without proper review.

The project collapsed and led to a write-off exceeding $250 million, delayed much-needed market upgrades, and eroded trust in ASX’s capability to manage critical infrastructure. As Australia’s primary securities exchange, the lack of governance and accountability put the entire market at risk.

The ASX experience is a clear warning – without robust processes for oversight and transparent communication, even industry leaders can suffer costly, systemic failures with real impacts on public trust.

How do frameworks strengthen decisions-making?

Yes, frameworks take time upfront. But they save time later by preventing rework, confusion, and regulatory investigation. And no organisation is too small to adopt formal decision-making processes. Even small teams benefit from knowing who decides what and reducing reliance on key individuals.

Why structure matters

Decision-making frameworks help by:

Defining roles and responsibilities (especially identifying the decision-maker).
Documenting the rationale, evidence, and options considered.
Creating a defensible record for regulators and boards.
Enabling confident delegation while preserving accountability.
Strengthening outcomes for better quality decisions.
Supporting organisational learning by reflecting on the why, what and how behind outcomes.

As mentioned earlier, regulators and other stakeholders can question decisions long after they’re made. Clear documentation provides the trail needed to demonstrate due diligence and integrity.

Examples of useful frameworks

Two practical models can help balance speed and structure in decision-making:

1. RAPID – clarifies five roles and breaks down like this:

Recommend – Someone gathers information and proposes options (often a subject matter expert)
Agree – Key stakeholders must sign off before the decision proceeds (think compliance, legal, risk)
Perform – These people will execute once you decide (they need to know it's feasible)
Input – Experts who provide specialist knowledge but don't have veto power
Decide – One person makes the final call (not a committee)

The beauty of RAPID is everyone knows their role before the discussion starts. No more "I thought you were deciding" moments.

2. DARE – follows a logical sequence:

Define – State exactly what you're deciding and why it matters now
Analyse – Gather evidence, test assumptions, identify risks (set a deadline to avoid paralysis)
Recommend – Present options with your preferred choice and clear reasoning
Execute – Implement the decision and document what happened

DARE prevents two common traps: deciding before you've properly analysed and analysing so thoroughly you never decide.

Each framework focuses on clarity and accountability — key ingredients for timely, high-quality decisions.

A quick check before your next organisational decision:

Have we identified who actually decides?
Do we have written analysis of at least three options?
Have we documented conflicts of interest?
Can we explain our reasoning to a regulator in six months?
Have we tested our assumptions with people who'll implement this?

Build confidence in every decision

Deliberate, well-documented decisions protect both people and organisations. They show regulators, boards, and stakeholders that decisions are made responsibly and transparently. And empower your people to act with confidence and integrity.

If your organisation operates in a regulated environment (or simply wants to make better, faster decisions) now is a good time to review your approach. Here are a few things you can do:

Review the different types of decisions in the business and figure out whether they provide for adequate input, documentation and authority over the decision.
Develop a framework or frameworks that are flexible but enable consistent application across different decision types.
Periodically review the application of decision-making frameworks to ensure they strike the right balance of quality, timeliness and documentation.

If you need support to strengthen your decision-making frameworks and processes, we’re here to help.

Our services include:

Reviewing past decisions and the processes and rationale behind them to inform future decision-making approaches.
Developing new frameworks for decision-making.
Validating the effectiveness of existing decision-making frameworks.

Contact our team today to see how we can support you.