A Geesys governance operating model may assist management in fulfilling their governance roles. This model is likely to enable the board and the executive leadership to organize the governance structure and the mechanisms by which governance is implemented. By the same token, the lack of a governance operating model may lead to an incomplete or faulty governance structure, or to inconsistencies, overlaps, and gaps among governance mechanisms. Such inadequacies may lead to failure to enact governance policies that the board and management have put in place. The sheer complexity of governance and the huge number of related procedures and other mechanisms in a global financial institution may indicate a need for a governance operating model. The elements of such a model may exist within many large FSI companies. However, those elements may not have been connected, rationalized, and organized to provide the consistent guidance and incentives that executives, risk managers, and business unit leaders require. A governance operating model has the potential to address this need and thus enhance management’s ability to implement governance and the board’s ability to exercise proper oversight.
A governance operating model defines the mechanisms and interaction points by which governance will be implemented. It enables the board and the executive leadership—as appropriate to their roles and responsibilities—to organize these mechanisms and points of interaction across the organization’s business lines, legal entities, and jurisdictions. An enterprise-level model, like the one described here, may be adapted to any functional or operating area to promote effective implementation of governance.
• Structure, which includes organization design and reporting structure, committee structures and charters, and control and support function interdependencies
• Oversight responsibilities, which define board oversight responsibilities, committee and management responsibilities, accountability matrices, and management hiring and firing authority
• Talent and culture, which enable the behaviours and activities required for effective governance by establishing compensation policies (particularly regarding incentives), promotion policies, business and operating principles, performance measurement and management, training, and leadership and talent development programs
• Infrastructure, which comprises governance and risk oversight policies and procedures, reports, measures and metrics, and management capabilities and the enabling IT and communications support Within these components, some of the key aspects of an effective governance operating model to be addressed will include: Board oversight and responsibilities: The board carries out oversight responsibility across the organization in areas such as business and risk strategy, organization, financial soundness, and regulatory compliance. In this regard, the governance operating model should help the board to:
• Articulate the skills and knowledge it requires to effectively execute its oversight responsibilities, and to assess its composition against those needs
• Engage management in providing the information the board requires to exercise governance and risk oversight
• Advise management on policies that ultimately influence the manner in which governance is conducted
• Understand governance activities that occur at various levels within the organization, and support management in its efforts to enhance program efficiency, and effectiveness Committee authorities and responsibilities: Effective board committee and management committee structures can help define the number, terms, and qualifications of members, committee responsibilities, reporting and escalation mechanisms, and ways in which board and management committees will interact. For example, for a management committee, the model could:
• Include committee charters that define the committee's responsibilities and addresses linkages between the committee, the broader executive team, and the board of directors
• Define the types of decisions, investments, events, risks, and other items that should come to the committee’s attention (and, when applicable, thresholds or amounts)
• Delineate methods of escalating and reporting significant matter committee
Organizational design and reporting structure: A clear, comprehensive organizational structure normally defines reporting lines for decision making, risk management, financial and regulatory reporting, public disclosures, and crisis preparedness and response. In an enterprise governance operating model, the organizational structure could enable executive management to:
• Establish the independence and authority of the control functions of compliance, risk, legal, finance, and audit
• Define a process of overseeing the spectrum of risks across all regions and businesses, including strategic, operational, market, credit, liquidity, legal, compliance, property, IT, reputational, and other risks
• Maintain a governance structure that is understandable to internal employees and external stakeholders
A Geesys governance operating model may assist management in fulfilling their governance roles. This model is likely to enable the board and the executive leadership to organize the governance structure and the mechanisms by which governance is implemented. By the same token, the lack of a governance operating model may lead to an incomplete or faulty governance structure, or to inconsistencies, overlaps, and gaps among governance mechanisms. Such inadequacies may lead to failure to enact governance policies that the board and management have put in place. The sheer complexity of governance and the huge number of related procedures and other mechanisms in a global financial institution may indicate a need for a governance operating model. The elements of such a model may exist within many large FSI companies. However, those elements may not have been connected, rationalized, and organized to provide the consistent guidance and incentives that executives, risk managers, and business unit leaders require. A governance operating model has the potential to address this need and thus enhance management’s ability to implement governance and the board’s ability to exercise proper oversight.
A governance operating model defines the mechanisms and interaction points by which governance will be implemented. It enables the board and the executive leadership—as appropriate to their roles and responsibilities—to organize these mechanisms and points of interaction across the organization’s business lines, legal entities, and jurisdictions. An enterprise-level model, like the one described here, may be adapted to any functional or operating area to promote effective implementation of governance.
• Structure, which includes organization design and reporting structure, committee structures and charters, and control and support function interdependencies
• Oversight responsibilities, which define board oversight responsibilities, committee and management responsibilities, accountability matrices, and management hiring and firing authority
• Talent and culture, which enable the behaviours and activities required for effective governance by establishing compensation policies (particularly regarding incentives), promotion policies, business and operating principles, performance measurement and management, training, and leadership and talent development programs
• Infrastructure, which comprises governance and risk oversight policies and procedures, reports, measures and metrics, and management capabilities and the enabling IT and communications support Within these components, some of the key aspects of an effective governance operating model to be addressed will include: Board oversight and responsibilities: The board carries out oversight responsibility across the organization in areas such as business and risk strategy, organization, financial soundness, and regulatory compliance. In this regard, the governance operating model should help the board to:
• Articulate the skills and knowledge it requires to effectively execute its oversight responsibilities, and to assess its composition against those needs
• Engage management in providing the information the board requires to exercise governance and risk oversight
• Advise management on policies that ultimately influence the manner in which governance is conducted
• Understand governance activities that occur at various levels within the organization, and support management in its efforts to enhance program efficiency, and effectiveness Committee authorities and responsibilities: Effective board committee and management committee structures can help define the number, terms, and qualifications of members, committee responsibilities, reporting and escalation mechanisms, and ways in which board and management committees will interact. For example, for a management committee, the model could:
• Include committee charters that define the committee's responsibilities and addresses linkages between the committee, the broader executive team, and the board of directors
• Define the types of decisions, investments, events, risks, and other items that should come to the committee’s attention (and, when applicable, thresholds or amounts)
• Delineate methods of escalating and reporting significant matter committee
Organizational design and reporting structure: A clear, comprehensive organizational structure normally defines reporting lines for decision making, risk management, financial and regulatory reporting, public disclosures, and crisis preparedness and response. In an enterprise governance operating model, the organizational structure could enable executive management to:
• Establish the independence and authority of the control functions of compliance, risk, legal, finance, and audit
• Define a process of overseeing the spectrum of risks across all regions and businesses, including strategic, operational, market, credit, liquidity, legal, compliance, property, IT, reputational, and other risks
• Maintain a governance structure that is understandable to internal employees and external stakeholders