The Board of Directors’ role in risk governance continues to attract the attention of regulators who demand that the appropriate risk tone be set at the top of financial institutions. While the largest US banks have made significant progress toward meeting these expectations, institutions still have work to do.
Our observations of the policies and practices of the largest US banks indicate that boards have undergone structural and functional transformation in recent years. We are finding that this transformation has been fueled not only by banks’ need to satisfy regulators, but also by their own realization of the benefits of stronger risk governance.
This A closer look analyzes banks’ current board risk governance practices and regulatory expectations, identifies areas for improvement, and provides our view of what banks should be doing now.