Corporate Governance: supervisory expectations
Amidst the myriad reasons that the financial crisis occurred:
"In recent years, internal governance issues have received the increasing attention of various international bodies." Their main effort has been to correct the institutions "weak or superficial internal governance practices as identified in the financial crisis. These faulty practices, while not a direct trigger for the financial crisis, were closely associated with it and so were a key contributory factor."
"Failures in risk assessment and risk management were aggravated by the fact that the checks and balances of corporate governance also failed. Many boards and senior managements of financial firms neither understood the characteristics of the new, highly complex financial products they were dealing with, nor were they aware of the aggregate exposure of their companies, thus seriously underestimating the risks they were running. Many board members did not provide the necessary oversight or control of management. Nor did the owners of these companies – the shareholders."
"Conversely, sound internal governance practices helped some institutions to manage the financial crisis significantly better than others. These practices included the setting of an appropriate strategy and risk tolerance/appetite levels, a holistic risk management approach and effective reporting lines to the management body in its management and supervisory functions."
In the years since, supervisors have increased scrutiny of corporate governance requirements and raised expectations for implementation, particularly in regards to risk management. This is happening across jurisdictions particularly as the Financial Stability Board ("FSB"),
"…has explored the tools and methods that are increasingly used by supervisors in order to intensify supervision, which is as important as strong rules on capital and liquidity...[through] the formulation of enhanced supervisory expectations for institutions' risk governance frameworks (e.g. strong internal audit function, risk appetite frameworks, risk culture)."
The goal of the "Corporate Governance: supervisory expectations" workshop is therefore to provide a forum of discussion among supervisors, regulators, financial institutions and academics.
This workshop is organized by the Master of Banking and Financial Regulation, Universidad de Navarra in collaboration with Promontory.
You can check the schedule of the workshop here.