More effective governance, oversight and control

Senior management of some regulated firms have, at times, failed to recognise the importance of effective Governance, Risk and Compliance functions when for a decade rapid growth and record profits were being delivered in financial services. Rather than forming integral parts of the business, they have often been perceived as unwanted costs of doing business and potential inhibitors to further rapid growth.

The Turner Report highlights that in the future, the focus on international cross-border governance will increase, with a renewed focus on risk management, particularly stress testing of both liquidity reserves and of the adequacy of capital held by banks. This should mean that the role and prominence of the Governance, Risk and Compliance functions within banks will become more important, and that the issues they seek to address will rise up higher up on the strategic corporate agenda.

During the next three years we will see an intense period of regulatory change. Compliance and Risk functions will need to adapt quickly to the proposed changes and be able to demonstrate that they have both the skills and leadership to match the scale and breadth of oversight that was not previously demanded of them. They will to attain need greater visibility and prominence with senior management.

The challenge will be for these professionals to manage their new relationships with the regulator in a new era of increased transparency more intense cross border scrutiny. Executives within financial institutions will have to acknowledge change and deliver greater prominence, recognition and reward to those people in governance, risk and compliance charged with ensuring that the future growth of their organisation is sustainable.