Over the last two months, we have been delving into Georgian Bank, which failed in September of 2009.
The postscript of this story is about board responsibility and oversight. This time period has led to heightened risk awareness and increased focus on the role of the board.
Directors are concerned when stories of bank failures continue. “Could this happen at our bank?” “Could a shoe fall that we aren't expecting?” The Georgian Bank case story exemplified what regulators are bound and determined not to have happen again: being blindsided. Does your board have the responsibility to assess risk, set risk parameters, and monitor risk in all areas of the bank? The answer has always been “yes”. The results have never been so critical.
Many times, lessons are learned the hard way. Having an open discussion between board and management can alleviate these concerns and create a culture of proactive risk awareness. Take steps to be vigilant in strategically assessing risk now, but also implications into the future. Do not make decisions in isolation. Ensure that the board is equipped with the appropriate tools to assess risk such as industry trending reports, concise reporting, third-party perspective, and continual education.