Banking Alert | Good governance and the role of supervisory boards

A few days ago, at the Luncheon of Chairs of Supervisory Boards of banks in Frankfurt, Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, held a speech detailing the ECB’s take on what a bank’s appropriate governance framework involves and how the supervisory board should support and implement it.

She noted several areas of improvement for supervisory boards, including the collective knowledge of the board, integration of the board within the bank, and board independence, including independence of thought. She further stated that non-financial risks are often overlooked in the risk appetite framework, and that the risk appetite framework must become an integral part of decision-making.