A reportby global consulting firm Deloitte in the Wall Street Journal discussed recent regulatory actions aimed at bank boards of directors. The initiatives include the OCC’s 2018 Bank Supervision Operating Plan and the Federal Reserve Board’s proposals to improve board effectiveness and establish a rating system for the governance and controls of large financial institutions. The FRB’s proposal, affecting mostly large bank holding companies with $50 billion or more in total assets, outlines key responsibilities to foster board effectiveness and the Deloitte report, building on the proposal, recommends action items partially listed below that may be helpful to all boards in improving their effectiveness.
- Confirm that the board is setting a clear and consistent direction to management regarding the bank’s strategy and risk tolerance.
- Review and revise materials to eliminate unnecessary information flows, with an increased focus on quality analysis and deep-dive discussions on topical areas.
- Foster a culture of controls into key areas, such as governance, risk management and compliance programs, with appropriate monitoring, reporting, escalation and disciplinary actions.