Nov 25 (Reuters) - The Reserve Bank of New Zealand (RBNZ) said on Thursday Westpac"s (WBC.AX) local unit needs to address risk governance and compliance concerns after an independent report highlighted "material shortcoming" in the board"s oversight. The report, prepared by management consulting firm Oliver Wyman, said the bank"s board fell short of the "standard" expectations on implementing risk governance measures, and noted the bank"s investment in risk management capabilities appeared "reactive, rather than strategic". "We expect Westpac NZ to prioritise remediation in line with the report"s recommendations and will be closely monitoring their efforts to ensure that they are effective," RBNZ"s Deputy Governor Geoff Bascand said in a statement. The report was commissioned by Westpac New Zealand on RBNZ"s instructions in March. Bascand added although the bank"s board has addressed some of the report"s findings, "there is a lot more do to". Westpac NZ, in a separate statement, accepted the findings of the review and said it was "well advanced" in addressing recommendations in the report. "We have also followed up immediately on other recommendations in the report, including restructuring committees and overhauling the way information on risk is provided to the Board," Westpac NZ Board Chairperson Pip Greenwood added. Reporting by Sameer Manekar and Yamini C S in Bengaluru; Editing by Krishna Chandra Eluri