ArtificiaI Intelligence and the Board Risk Committee by Isaac Alfon, senior risk practitioner and NEDonBoard member

By Elise Perraud

The purpose of risk management in financial services is usually defined as to ‘protect and enable’. The ‘protect’ dimension can refer to the franchise value of the business but is mainly about protecting from regulatory intervention. ‘Enable’ has a perspective of value (however defined) and achievement of company objectives.

AI-based solutions, leveraging on vast amounts of data, are already a reality in the world of financial services, and these solutions are only likely to become more prevalent in the next ten years. What are the implications of AI developments for a Board Risk Committee?

The simple ‘protect and enable’ approach suggests a number of points for discussion:

Carillion’s lessons learnt – Part 1: Why all non-executive directors and board members should complete a training programme

By Elise Perraud

The report of the select committees on the collapse of Carillion, released on 16th May has raised a number of important issues, ranging from the company’s corporate culture; its internal control environment; the competence and complacency of its auditors and advisors; the duties of the non-executive directors, chairman and senior executives who were members of the board of directors; the role of the Financial Reporting Council and The Pensions Regulator.

As the Professional Body for non-executive directors and board members in the UK, we have carefully reviewed the findings of the MPs related to the responsibilities of the board of directors. These findings reinforce the message we have been communicating to our audience in the past few years:

  1. Taking on a non-executive or board member role entails high responsibilities vis-à-vis the organisation’s stakeholders.

How do NEDs and board members get to understand the most technical aspects of board matters? Expert advices from Michael Bartholomeusz

By Elise Perraud

Michael Bartholomeusz was one of the panellists of our Board Risk Committee Best Practice Event. He is a portfolio NED, a former Chief Risk Officer and a member of the NEDonBoard community.

We asked Michael Bartholomeusz the following question: What best practices help board risk committees understand the most technical aspects of risks such as cyber risk or outsourcing? We consider that his expert advice applies to any specialist sub-committee of the board or the board itself when NED and board members deal with technical matters:

  • Skills. The Board and its sub-committees must collectively have the knowledge of how things have evolved and a good understanding of current and near-term developments that could shape the business environment in which the firm operates.
  • Experience. There is a requirement for the members’ accumulated wisdom of “having done it before and the knowledge of what has worked and what has not worked”.
  • Judgement. NEDs and board members must have the following qualities: independence of mind, willingness to challenge, not being put off by technical terms, critical thinking and emotional intelligence.
  • External expertise. The Board and its sub-committee must be willing to draw external experts when this is necessary. The external experts may not be members of the Board …read more

    Read more here:: How do NEDs and board members get to understand the most technical aspects of board matters? Expert advices from Michael Bartholomeusz

What we have learnt from the expert panellists of the NEDonBoard Board Risk Committee Best Practice Event on 24th April?

By Elise Perraud

On 24th April, NEDonBoard hosted a panel discussion around best practices for board risk committees in the financial services sector. NEDonBoard takes this opportunity to thank the panellists, Michael Bartholomeusz, Marcia-Cantor Grable and Nick Dexter. Elise Perraud chaired the panel and moderated the discussion. This article outlines some of the highlights of the insightful discussion, which was followed by a networking session for participants.

  • The panellists stressed the benefits of having separate board risk committees in the financial services sector, to filter the matters that require escalation to the board. Michael Bartholomeusz highlighted the need for a dedicated body to reflect the complexity of business and regulatory environments, the expertise required to understand and assess matters brought to directors and their limited time to deal with an increasing number of priorities.
  • Board risk committees are effective to the extent that the Chair and the Chief Risk Officer (CRO) work in tandem. Marcia Cantor-Grable stressed how the Chair and the CRO should agree how complex and technical discussions will be captured and recorded.
  • Good risk reporting is essential to effective governance and decision-making. Nick Dexter said that good risk reporting starts with a well-articulated risk appetite and includes current and forward looking analysis as …read more

    Read more here:: What we have learnt from the expert panellists of the NEDonBoard Board Risk Committee Best Practice Event on 24th April?