The Important Role of the Board of Directors and Management

Posted in Risk Management on April 12, 2024
Role Of The Board Of Directors

The role of the board of directors and management is in relation to information security compliance in an organization. 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. 

Role Of The Board Of Directors

The Role of the Board of Directors and Management

The board sets the requirement that information security compliance is a zero-tolerance area. The 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 to ensure effective information security compliance.

The board of directors is responsible for the approval of the corporate strategy and company policies. The board of directors must ensure that the 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 effective information and data security compliance. It includes the board of directors and senior management setting the tone at the top, hiring a qualified CISO, 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 information security 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 compliance. The board determines whether an audit and control system is in place to periodically test and monitor compliance with internal control policies and 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 BISC is formed to ensure that all the applicable laws, regulations, and other regulatory requirements are identified and complied with. BISC works with the information technology, regulatory compliance, business, and operations teams. Then, it reports to the company’s CEO to ensure that overall information and data protection measures and controls are effectively implemented and working. It also monitors and controls possible cases of data breaches, data misuse, or cyberattack.

The board provides direction and resources to the information security team to enable data and information protection at all levels of the organization.

Role Of The Board Of Directors

Final Thoughts

Oversight and monitoring are terms that are frequently used in corporate governance codes to explain the Board’s role and responsibilities, but these terms may be interpreted differently for each organization, and it may be up to the organization’s management how and what information related to information security they give to the Board. Understanding the Board’s role and responsibilities will assist management, including CISOs, in communicating information security in a way that the Board will find useful.