What’s next for bank board risk governance?


What’s next for bank board risk governance?

Recalibrating to tackle new risk oversight expectations

We are pleased to share key insights from the Deloitte Center for Financial Services (DCFS)’s fourth-in-aseries study on board risk governance. In this edition, we focused on how bank board risk committees are documenting their risk management governance1 mandates in light of their evolving roles in managing information flow, holding senior management accountable, and ensuring that the risk management function maintains sufficient independence, among other key priorities.

Executive Summary

Ironically, the demand for more rigorous risk management protocols has emerged at a time when the pace at which new regulations are produced has slowed after a decade of continuous escalation, and when most banks appear to have mastered the large, post-crisis regulatory compliance items such as the US Federal Reserve (the Fed) Comprehensive Capital Analysis and Review process.

In August 2017, the Fed proposed revisiting supervisory expectations of bank boards “to establish principles regarding effective boards of directors focused on the performance of a board’s core responsibilities.” The Fed’s proposal delineates board member oversight responsibilities and management’s obligations in new board effectiveness (BE) guidance, and follows the US Department of the Treasury’s June 2017 recommendation of an interagency review of requirements imposed on banks’ boards.

In this context, the DCFS study is a timely addition to the current discussion around the role of boards at large banks. The renewed focus on the role of the board risk committee comes at a time when board members frequently find themselves being drawn “into the weeds” of risk management issues, and left with inadequate time to guide and challenge management on broader strategic issues.

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Inside Magazine Risk Global edition, February 2018

Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.

Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).

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