Institutions in the broad sense are not just organisations – they are the building blocks of social relations. One of the defining characteristics of an institution is that we rely on and put our trust in it. So when institutions betray that trust – be it through cheating, bribery, abuse or any other unacceptable practice – the consequences go beyond the harm to individuals (great as that can be, especially in cases where people have suffered abuse or lost their life savings). We lose some of the glue that binds us together as a community and country.

Leaders of failed institutions are prone to blame their problems on individuals – a "bad apple in the bunch" or "isolated human failing". These excuses do not wash. When institutions are examined closely, it quickly becomes evident that wrongdoing is not a few individuals but a system going wrong. We saw clear findings to this effect from the royal commission into "oil for food" kickbacks during the Iraq War (mainly by AWB) and from the royal commission into institutional child sexual abuse. Although too early to predict its findings, it's already clear that the royal commission into banking and financial services misconduct is identifying widespread, systemic institutional failings.

The bad news is that some institutions have let us down and abused the trust we put in them. The good news is that recent cases share common features, where we have seen institutions put on a pedestal and left unquestioned, considered too big or too important to fail, operating in secret behind closed doors. Because we can identify these common features, we are better able to deal with root causes of failure. The other good news is that many other Australian institutions are working well, often for reverse reasons: subject to legitimate questioning, connecting with people and transparent in how they work.

One of the most telling moments of the Cole royal commission into the oil-for-food scandal (where AWB paid kickbacks to Saddam Hussein's regime in Iraq in contravention of United Nations sanctions to which Australia was a party) was when prime minister John Howard was asked whether he had any suspicions that AWB, one of the largest exporters to Iraq, might be rorting. Howard answered: "I had always believed the best of that company ... it had been associated with the Australian wheat industry since the 1930s and it hadn't crossed my mind that it would have behaved corruptly." AWB was an iconic institution, our bulwark against unfair wheat marketing by others, never suspected itself of doing the wrong thing. Yet it was precisely because the government and regulators thought so highly of AWB that they failed to spot it paying kickbacks.

Being respected is no guarantee of good behaviour – indeed, it can induce the opposite. It is dreadfully easy for an organisation perceived as able to do no wrong to slip into doing whatever it wants, with no fear of consequences. Similar considerations apply to the scandal of sexual abuse by clergy: clerics, put on a pedestal and revered, were less likely to be questioned; tragically, some of them took criminal advantage of this position of trust.

Younger readers may be surprised to learn that banking was once respectable. Bankers have been on the nose for years, something even they realise – in a classic ad from 2006, a backyard BBQ is brought to a horrified silence by the guest who declares "I'm a banker". Even so, banking as an institution has, until the latest royal commission, been largely shielded from serious critical scrutiny by its legacy reputation for probity.

A less consequential – but, for many Australians, more shocking – institutional failure was the revelation the Australian cricket team had engaged in ball tampering, abrading one side of the ball to change its flight, in a Test match in South Africa. In cricket, that's cheating. If Howard, the man who said being prime minister was second in importance to being captain of the Australian cricket team, never thought AWB could behave corruptly, he surely never would have anticipated the ball-tampering scandal. When the news broke, Howard expressed intense disappointment. Australian sports fans had their trust betrayed by a group who had been put on too high a pedestal, and who had been allowed to think they were beyond criticism.

The other thing the cricketing scandal shows was how the game's administrators, Cricket Australia, had become secretive and closed, operating with little transparency. It has been the same with banking and superannuation –large, complex, mysterious to the point of being impenetrable.

This has come about in part as organisations have grown, and become both wealthier and more remote from their communities. When banking was small and local, as it still is in some country towns, bank managers could not get away with dodgy loans and cheating customers – people would cotton on and the manager would be soon gone. The people running the local cricket club could not get away with creating a culture of winning at all costs, including through cheating – it would be unacceptable. Smallness can be more transparent.

Not every Australian institution has lost its way. There are literally hundreds of examples of good practice. Take a small sample: the judiciary, the military and the Reserve Bank.

The judicial system – our courts and judges – work well, remarkably fair and lacking corruption. There is high transparency: courts work in the open, with public access and scrutiny, decisions published with full reasoning and appelable. The system uses hierarchy in a good way, superior courts and judges keeping a weather eye on those below them, ensuring standards of openness and probity. The success of this institution comes from centuries of practice. Until 1641, one of the highest courts in the British legal system was the Star Chamber, comprised of worthy and (in its early years) highly respected privy councillors. But when the power went too far, and the chamber started working behind closed doors to exercise power in an arbitrary fashion, it became a synonym for bad practice and was eventually abolished. The system learned not to do it again.

Our armed forces, at least in terms of operational matters, share some of the character of the judiciary. The hierarchy maintains standards and closely monitors adherence to rules of combat. Operations or actions are always followed by a detailed after-action review examining what went well or badly. There is external scrutiny, by academics and official monitoring bodies, and also by the Australian Strategic Policy Institute. This institute is government-funded but fiercely independent of the public service and the military – a good model for an independent banking and finance policy institute. It's not all roses – in some areas, such as procurement and management, as opposed to operations, the opportunities for improper practice are rife. The spate of revelations about highly questionable culture and behaviour inside the elite Special Air Services is an exception, but proves the more general point. SAS soldiers are put on a pedestal, regarded as elite; they operate with higher levels of secrecy and minimal disclosure; they are less accountable as a result.

Finally, the Reserve Bank has been one of the main reasons Australia's economy is so strong. The RBA manages monetary policy, setting official interest rates. It is not without blemishes – its note-printing arm, Securency, was involved in an international bribery scandal – but in its core business, it display the characteristics of a sound institution. It is transparent: board minutes are published, there is an official statement after every meeting, and its thinking about the economy is revealed every quarter in a comprehensive bulletin providing not only an overview of the Australian economy but a range of articles about national and global economic developments. While respected, the RBA's board and staff are more likely to be seen as nerdy economists than put on a pedestal and idolised. The bank encourages scrutiny and peer review of its work. It all goes towards making it a more effective institution.

Transparency, openness to criticism and willingness to act on it, being held in respect but not so much respect that an "I can do no wrong" culture develops: these are key lessons for other Australian institutions, from banking and finance, churches through to cricket.

Stephen Bartos is an economist and a former Finance Department deputy secretary.