Developing an effective governance operating model
A guide for financial services boards and management teams
A governance operating model is the mechanism used by the board and management to translate the elements of the governance framework and policies into practices, procedures, and job responsibilities within the corporate governance infrastructure
In recent years, many boards of directors in the financial services industry (FSI) have been working to bolster the effectiveness of their organisations’ governance models. For example, boards appear to have strengthened their governance frameworks and policies and reasserted their governance roles, established board-level risk committees, clarified the responsibilities of other board committees, and appointed chief risk officers (CROs) or reinforced the independence of existing CROs. Concurrently, senior executive teams have committed resources to enhancing governance frameworks.
However, many FSI companies may have come to realise that work remains if they are to operationalise the structures and institutionalise the principles they have adopted. Moreover, the expectations of regulators, investors, and other stakeholders regarding governance have shifted over the past few years (see sidebar: Drivers and expectations). Stakeholders now see boards as more accountable for the effectiveness of their overall governance process. This shift is real, and it is significant, and is likely to amount to an expectation of greater board involvement in the means by which governance is organised and effected, and for more active oversight by the board and its committees.
Inside magazine issue 7, February 2015
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