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The role of self-assessment in board meetings

November 3, 2014
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Every bank has a board of directors, with each member providing his or her experience and expertise to develop strategic plans and enhance the institution as a whole. According to the FDIC, the Board’s role includes:

• Selection, monitoring and evaluation of management
• Establishment of business strategies and policies
• Monitoring and assessment of business operation progress
• Establishment and monitoring of adherence to policies and procedures required
• Making business decisions after fully informed and meaningful deliberation
• Requiring management to respond to supervisory criticism promptly

In addition, bank boards perform annual self-assessments. Those regulated by the OCC and above $50 billion in assets are expected to use the results to detect opportunities to improve and implement specific changes that can be tracked, measured and evaluated. According to Eric Fischer, senior fellow at the Boston University Center for Finance, Law & Policy, there is no reason why institutions of all sizes shouldn’t be held to similar standards.

The challenge, as Fischer mentions, is many board members at smaller banks see their self-assessments as routine, “check-the-box” exercises. Unfortunately, “The need for banks of all sizes to enhance their business models and strategic plans with insightful contributions and oversight from board members has become too urgent to allow biases against meaningful evaluations to prevail.”

Regulatory agencies have released self-assessment questionnaires to be used by bank boards. They generally cover: board information, composition and accountability, strategic planning, the governance process and succession planning, among other items. They typically feature a mix of ratings and qualitative responses. Here’s an example of the OCC’s self-assessment questionnaire:

Still, Fischer says, the process of completing the self-assessment has little impact. “Board members have inherent biases against rocking the boat, criticizing current board practices or identifying individual directors who are underperforming.” In addition, there isn’t much incentive for board members to speak up, as examiners (of banks under $50 billion in assets) typically give the boards credit for simply conducting the self-assessment.


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According to Fischer, there are four questions that bank boards should keep in mind:

1. Board Composition – What, if any, changes are needed?
2. Information provided to the board – Is there a need for improved, additional and/or more frequently updated information to provide maximum value and meet oversight responsibilities? Or, do they need more context and less data?
3. Board training – What are the top three topics for which the board needs training?
4. Access to management and regulators – Is there a need for increased interactions?

Embracing the self-assessment process and acting on results will help banks to become more forward-looking and ensure they are prepared for the future.

About the Author


Raleigh, N.C.-based Sageworks, a leading provider of lending, credit risk, and portfolio risk software that enables banks and credit unions to efficiently grow and improve the borrower experience, was founded in 1998. Using its platform, Sageworks analyzed over 11.5 million loans, aggregated the corresponding loan data, and created the largest

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