Banks have specific security requirements which their specialised corporate governance should address. A board portal can make compliance simple by providing the needed security. The need for UK bank boards to oversee “internal governance,” that is, the efficient and secure exchange of real-time information, can be fulfilled, in large part, by a board portal.
A greater push for internal corporate governance
While a strong system of corporate governance is important for UK companies, banks require a structure particular to their needs. “Corporate governance of banks is different from corporate governance of ordinary companies,” writes the European Bank for Reconstruction and Development (EBRD) in a recent report. “This is due to the nature of the banking business, the complexity of the organisation, the uniqueness of banks’ balance sheets, the need for protection of the weakest party in the chain (i.e., the depositors) and the systemic risks that a bank failure cause.”
One of the biggest corporate governance challenges for UK banks, the EBRD notes, is “internal governance.” That means boards have a high level of responsibility for overseeing cybersecurity at the institution.
Banks today depend entirely on real-time communication and up-to-date information, given that they are increasingly shifting operations online. This means that the flow of information and communication among board members, management and workers must be secure, with information only made accessible to those who have a right to it. This is part of the board’s role with respect to ensuring that the best possible security is put in place at every level – a board portal facilitates control of information, data and security.
One good example in which security of communications is challenging is when boards communicate with management. Calls, messaging and conferencing should take place in a secure environment. Sharing of documents and materials should be carefully controlled, particularly with attention to access rights. Using a board portal addresses these issues, providing a secure overall environment in which the company secretary can control access to all materials. This allows management to share what they require but does not give management access to board-level discussion.
Above all, the board of a bank must have up-to-date information at its fingertips, and management must receive timely oversight from the board. In today’s hotly competitive environment, banks must always look ahead, never stand still.
At UK banks, management and the board collectively identify the information that directors need for effective oversight. For example, the board does not need reams of operational data on every business unit; poring over such data typically would be a waste of time for a busy director. On the other hand, if a director should request more detailed information to clarify an issue or to assuage a concern, management is charged with providing that information. This kind of exchange can take place in real time via the board portal.
Similarly, the flow of information to the board from the entire organisation, and the implementation of board decisions within the bank can be facilitated greatly by the board portal.
The company secretary acts as a kind of doorkeeper between the board and management and the rest of the organisation. Using a board portal, that person can easily ensure the accuracy of messages from the board, can put them into a form acceptable to management, and then can transmit them to all of the bank’s workers.
The board portal provides control of all data to the chairman, and all of the directors, so that only refined and accurate messaging takes place among the board, management and the organisation itself. The company secretary must ensure that channels of communication to the whole organisation are secure and efficient.
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Banks facilitate risk management with board portals
No aspect of corporate governance at banks is more important than the management of risk. All banking operations involve some level of risk, and so management must micromanage it throughout the organisation, while the board must determine risk appetite and provide limits.
Oversight of risk at UK banks is usually divided among the board as a whole, the audit committee and the risk committee – there may also be other committees for specific risks like cybersecurity.
As Deloitte points out in a recent report: “As the nature of oversight expectations evolves, bank boards — particularly the board risk committee and the audit committee — will have to recalibrate to provide an effective challenge to management on overall risk strategy and develop mechanisms to hold management accountable.”
These interchanges among the board, the risk committee, the audit committee and management are highly charged, dealing with some of the most important issues the board of a bank faces — support from a board portal can be critical at this juncture.
As the report puts it: “. . . boards of large financial institutions face significant information flow challenges. . . . Absent actively managing its information flow, boards can be overwhelmed by the quantity and complexity of information they receive. Although boards have oversight responsibilities over senior management, they are inherently disadvantaged given their dependence on senior management for the quality and availability of information.”
The board portal here can play a key role in assuring the secure communication among all parties – this would not be the place to permit leaks of information – as well as in refining the risk management policy to a point where it can be implemented throughout the financial institution’s operations. The control of information that a board portal provides, along with the secure environment it offers, both greatly facilitate decision-making at the board and board committee levels.
Diligent Board Portal resolves these issues for banks
Diligent Boards moves all of the agendas, documents, annotations and discussions of board meetings online into one intuitive, secure portal. The platform goes beyond digital board books to manage the full scope of a board’s moving parts — committees, contacts, voting, reporting and more.
With Diligent Boards, on-the-go directors will have more than iPad board meeting software at their fingertips. From a single sign-on (even for multiple boards), they’ll be able to work across devices (with real-time syncing) to keep up with committee meetings and materials and communicate effectively in a secure environment, with the ability to annotate documents in tandem with other users and to get notifications for updates, to easily search archives and board resources, to complete questionnaires, and to submit their votes and signatures any time of the day or night, from anywhere in the world, from their smartphone, tablet or laptop.
Board Portal Buyer’s Guide
With the right Board Portal software, a board can improve corporate governance and efficiency while collaborating in a secure environment. With lots of board portal vendors to choose from, the whitepaper contains the most important questions to ask during your search, divided into five essential categories.
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