What are Board Oversight and its Roles? The Board of Directors sets the tone of the organization. The Board of Directors comprises members with specialized expertise in different domains such as finance, compliance, information technology, risk management, human resources, and marketing. The board of directors is responsible for setting a strong compliance culture and ensuring that management understands and complies with all the applicable regulatory requirements.
The board sets the requirement that corporate compliance is a zero-tolerance area, and to ensure the effective corporate compliance Board forms sub-committees to ensure that each Board level sub-committee works as per its expertise and provides oversight and direction to the management.
The Board Oversight
The board of directors approves key corporate compliance and other company policies. The board of directors must ensure that resources and funds of the company are utilized in the best possible manner to ensure that shareholders’ value is maximized and the company’s profits are grown.
A sound governance structure is the foundation of an effective Corporate Compliance program. It will include the Board of Directors and Senior Management setting the tone at the top, hiring a qualified Chief Compliance Officer or CCO, and properly resourcing the three lines of defense. In an organization such as a bank or a financial institution, the Board of Directors is primarily responsible for setting a strong compliance culture and implementing the compliance program.
The «tone at the top» is a public commitment at the bank’s highest levels to comply with regulatory requirements as part of its core mission and recognition that this is critical to the overall risk management framework of the company.
The board reviews policies and procedures periodically and ensures their compliance. The board determines whether an audit and control system is in place to periodically test and monitor compliance with internal control policies/procedures and report to the board instances of noncompliance.
To achieve this objective, the board hires a competent management team in different specialized functions, including finance, sales, marketing, compliance, risk management, information technology, human resources, and operations. These functions are required to identify and comply with applicable regulatory requirements.
For this purpose, the Board Level Corporate Compliance Committee is formed to ensure that all the applicable laws, regulations, and other regulatory requirements are identified and complied with. Bard compliance committee works with the Compliance Officer and Chief Executive Officer of the company to ensure that regulatory processes are robust and breaches are avoided.
Board provides direction and resources to the management team to enable the culture of corporate compliance at all levels of the organization.
Board oversight entails directors constantly questioning whether the board’s delegation of authority to management is reasonable and whether the board has received sufficient and accurate information from management to make that determination. Strategic initiatives, financial performance and the integrity of financial statements, accounting and financial reporting processes, risk management, and compliance are typical areas of oversight.