The Handbook of Board Governance, 2nd Edition

30100 Questions Directors Should Ask When Assessing the Effectiveness of Risk Systems

F. Edward “Ted” Price C.DIR.

Principal, Kingburg Governance; and Retired Deputy Superintendent, Supervision, Office of the Superintendent of Financial Institutions Canada (OSFI)

Introduction

Editor's Note: The following are publicly available speaking notes that accompanied remarks delivered by Ted Price, and are reproduced with permission from Mr. Price for a speech delivered by Mr. Price after the Global Financial Crisis, in September 2011. The notes, and the questions below, have not been edited.

Canada did not experience significant adverse effects of the above financial crisis, and had not had to bail out a financial institution. The federal financial regulator of banks, insurance companies, and other federally regulated financial institutions is very effective and emphasizes effective risk management. (In full disclosure, the editor has advised the federal regulator in the past, and came to meet and know Mr. Price.)

Although the questions below have not been edited since their inception, they are effective questions that any good board should be asking in the area of risk management, particularly boards of financial companies.

The editor is grateful to Mr. Price for permission to reproduce the notes and questions below.

The Challenge

• Following the financial crises much has been written about the need to improve governance in financial institutions, particularly risk governance.