What do the Australian financial services and aged care sectors have in common? Maybe more than you think:
- They both have consumers who historically have not been properly prioritised at front and centre
- They both have risks and compliance obligations that can lead to consumer harm when not managed well
- They have both had Royal Commissions that highlighted the need to do better
- Their risk and compliance management has traditionally not been well aligned to better outcomes
- They have, and continue to go through, major regulatory reform
Find out more about how enterprise risk management can help organisations meet their governance, risk and compliance requirements:
Background to the Aged Care Act
The Australian Aged Care Act 2024[1] passed Parliament on 25 November 2024 and comes into force on 1 July 2025. It follows three prior ‘Amendment’ Acts in 2021 and 2022 arising from the earlier Aged Care Royal Commission[2]. This regulatory change kickstarted by the Aged Care Royal Commission requires, amongst other things, a much greater focus on governance, risk management and regulatory compliance.
To many who care for our older generation, these words can sound like additional financial and time overhead and more distraction that adds bureaucracy to the task of caring for our older people. The truth of this depends on how providers respond to the act and the way that governance, risk and compliance is structured and practiced.
The focus of the new Aged Care Act 2024 (the Act) is to ensure aged care is driven by the rights and needs of older people i.e. the consumer. The key objective for all aged care providers should therefore be to:
“respect the rights and meet the needs of older people / the consumer”
The aged care industry and related regulation has traditionally been more focused on aged care providers and how to fund them, rather than around the people accessing services and what they need. The voice of the consumer needs to be louder and listened to more intently!
Moving the focus to risk management
“Risk is the effect of uncertainty on objectives.”[3]
Once we are clear on our consumer-centric objectives, our risk management will naturally be focused on the risks that could stop us achieving those objectives. That is, to identify, analyse, evaluate and manage the things that could prevent us from respecting the rights and meeting the needs of our older people. Managing risk is a means to an end. The end is better outcomes for older people.
Risk management should be called “outcome management”. Strong, effective and practical governance, risk and compliance (GRC) is the key to better consumer outcomes and at the same time ensuring we meet the requirements of the Act.
Governance, risk and compliance and the Act
Governance
Governance drives accountability and oversight. Strong governance ensures that aged care providers operate with clear leadership and accountability frameworks. The Act mandates enhanced reporting and oversight mechanisms, requiring boards and executives to ensure compliance with stringent care standards. By embedding governance best practices, providers can align their strategic objectives with regulatory requirements. This includes establishing dedicated compliance committees, conducting regular audits, and fostering a culture of ethical decision-making.
Risk management
Risk management allows the provider to proactively identify and manage the risks that could impact upon the provider’s objectives. The Act underscores the need for proactive risk management to safeguard residents and staff. Providers must identify potential risks, such as elder abuse, neglect, or staff shortages, and implement mitigation strategies.
A comprehensive risk management framework includes regular risk assessments, scenario planning, and incident reporting systems. Leveraging data analytics can further enhance the ability to predict and address emerging risks, ensuring compliance with the Act’s quality and safety mandates. The ultimate benefit however is that less serious things go wrong and if they do go wrong things are managed effectively to minimise consumer harm.
Compliance
Strong compliance management is not focused on ‘tick the box’ compliance, but should be built on a strong ethical based approach to enable the meeting and exceeding of regulatory standards and the enhancement of the reputation and brand of the provider.
Compliance management is the backbone of adherence to the Act. However, compliance management can be overwhelming and costly. As a result, providers need to implement systems to help understand and manage regulatory obligations and monitor, or action, any changes as they occur. Staff training should be aligned with regulatory expectations and adequate documentation and evidence maintained through the process.
Technology-enabled compliance tools can streamline tracking and reporting processes, reducing the administrative burden while ensuring transparency.
Conclusions and next steps for your organisation
By integrating governance, risk, and compliance frameworks, aged care providers can not only meet, but exceed, the expectations of the Act. This proactive approach not only mitigates legal and reputational risks but also enhances trust among residents, families, and stakeholders, ensures the consumer’s rights are upheld and their needs are met, contributing to a sustainable and high-quality aged care sector.
We at Protecht have a mission to “redefine the way the world thinks about risk”. We strive to achieve the maximum value from your governance, risk and compliance investment and efforts while ensuring you meet not just the letter of the law, but also its sprit.
Our Protecht ERM solution is designed to equip aged care providers with a powerful GRC framework that ensures seamless alignment with the Aged Care Act 2024, enhancing compliance, safety, and operational efficiency across all care environments.
Protecht ERM enables aged care providers to track compliance obligations, manage incidents, and align with regulatory standards such as SIRS (Serious Incident Response Scheme)[4], ensuring real-time visibility and accountability in operations.
Find out more about how Protecht ERM can help aged care organisations meet their governance, risk and compliance requirements:
References
[1] Australian Aged Care Act 2024
[2] Royal Commission into Aged Care Quality and Safety