Governance and conduct video series: Five key steps to operationalising effective governance

Video | October 2018 | 03:14
Transcript
John Davison Hello and welcome to the first in our conduct and governance series of videos. I am here with Alina Rotari, a compliance executive in our regulatory compliance consulting business, who is going to talk to us about operationalising effective governance. Alina?
Alina Rotari Thank you John. Well, I think that businesses should focus on five key steps when it comes to driving an effective governance framework. First, there seems to be an ongoing issue with overlapping accountability within the firms that we work with, so therefore understanding and acting upon the relationships between committees, obviously starting with the supervisory board, the audit committee, the risk committee, is obviously a key point. Secondly, I think once you establish what each committee’s ultimate role is, it becomes much easier and clearer to narrow down where each function fits within the advisory, decision making or accountability space.
John Davison That’s a really good point, I think we have all worked in organisations whereby we’ve been really unclear what the responsibility of each committee actually is and who is making the ultimate decision and that’s a really important link to SMR as well. So that’s a great point. The other thing that we were talking about, which I think the third point you were talking about to me the other day was, was around escalation paths. I wonder whether you have a view on escalation to committees?
Alina Rotari Well, although I’ve seen firms use a wide range of methods, I think there still seems to be an underlying gap when it comes to escalation of issues or matters arising. I think businesses should focus on setting out a clear escalation route from first line, through supervision, management and governance in order to mitigate any potential risk.
John Davison I think that’s really important because often we find in organisations that issues get stuck in the business and don’t find their way through to the right committee so they can’t discharge those responsibilities. So I agree with that point. The other thing we were talking about was around reporting. So, obviously, the escalation part is important but actually making sure there is effective reporting I think is important. Would you agree with that?
Alina Rotari When it comes to reporting businesses should ensure that reporting to each committee is relevant, rationalised and capable of risk based decision making.
John Davison The importance of that, I guess, is making sure each committee can discharge its responsibilities by having proper, correct, effective reporting sent to it. Which again, is another mistake I think we were saying a lot of organisations have. That’s four really interesting points. I wonder whether or not, just to wrap up the five, you could give us a general view as to a summary point that you think would be important for all organisations to take away?
Alina Rotari As a concluding point, governance ultimately is risk targeted, because it drives action back for the business overall. So, to summarise quickly the five key steps, first ensure that there is no overlapping accountability between committees, secondly, assign responsibilities to committees based on their assigned role, have a clearly designed escalation tool and reporting infrastructure, and finally the risk management should be a priority for governance and board agendas.
John Davison Thanks very much Alina, that’s really useful.

Contacts

John Davison

John Davison

London