across the boards: views from the financial services boardroom - pwc · 2016-10-27 · across the...

Across the boards:Views from the financialservices boardroom

Find out what financialservices directors thinkabout cyber, IT, risk,meetings, activists,and more.

www.pwc.com/fsi

Across the boards:

Views from the financial services boardroom 1

The heart of the matter

Look around the boardroom. What’s working? What could be

better? In our 2015 Annual Corporate Directors Survey, we asked

financial services directors to tell us about the challenges they

face. And they did: we heard candid opinions about succession

planning, activists, risk management, cybersecurity, and more.

How can boards get better at what they do? How can directors

stay on top of a flood of information and make their oversight

role more manageable? See how your board stacks up.

If you’re a member of the board of a

financial institution, congratulations. You’re

due equal rounds of thanks and sympathy.

In the history of corporate America, few

director groups have been subject to more

regulatory scrutiny, risk, and stress than

those of banking and capital markets (BCM),

insurance, and asset and wealth

management (AWM) firms. And it’s not

getting any easier.

Sitting on the board of a financial institution

has its rewards, to be sure. But it’s also a

pressure-packed, labor-intensive grind. Our

survey reveals that a growing number of FS

directors are addressing a variety of

oversight challenges with both confidence

and uncertainty:

Low interest rates and stiff competition

continue to pinch margins and revenues,

while the costs of compliance and

technology soar.

Shareholders are demanding greater

access to the board and a greater say in

strategic decision-making. While

financial institutions have largely

avoided the increase in hedge fund

activism in other industries, that’s

changing. With price-to-book-value

ratios low by historical standards, the US

banking sector has become an attractive

hunting ground for activist investors.

The regulatory environment continues to

become more complex. Oversight

agencies are demanding that boards get

more hands-on in setting risk appetites

and monitoring control functions as they

consider the root causes for last decade’s

financial crisis.

Boards face a growing set of risks,

opportunities, and competitive

challenges from technology. New

customer-facing options, such as mobile

wallets and social media, hold promise to

boost revenues, while better back-office

systems can improve efficiency. FinTech

competitors are intruding on traditional

FS space, while cybersecurity is

demanding more attention.

PwC’s Annual Corporate Directors

Survey is designed to gauge director

sentiment on a wide variety of

governance issues. For the 2015 survey,

we surveyed 761 board members from

various industries. Of those, 131

members (17% of all participants) are

board members of financial

institutions. The financial services

sector cross-section of participants

includes 40% banking and capital

markets, 40% insurance, and 20% asset

and wealth management.

Across the boards:


With so much information for FS directors

to absorb, so many risk-related tasks to

embrace, the job can seem overwhelming.

Managing it all is a team effort. Boards are

getting more involved than ever putting

those teams together, monitoring the talent

pipelines within the organization, and

thinking about the qualifications and

competence of fellow directors. The

stereotypical bank board has given way to a

more diverse group with a wider variety of

backgrounds, skills, and experiences.

Our survey shows that FS boards are

responding to these and other challenges

with growing amounts of diligence and time.

Among the key findings:

Directors are working to improve

the quality of their boards. Roughly

two fifths of FS directors would like to

see director changes on their board. And,

as challenges increase, most FS directors

believe their boards should devote more

time to director succession planning.

Certain skill sets, including risk

management, cyber risk, and technology,

are in especially high demand.

FS boards are talking more often

with large shareholders and

activist investors. Sixty-seven percent

of FS directors say their boards regularly

communicate with their largest

shareholders; 31% of boards interacted

with an activist within the past 12

months, compared with 23% in 2014.

IT strategy and spending are

garnering more board-level

attention. FS boards are providing

more oversight in IT budget-setting and

major project implementations, and

ramping up oversight of strategies

involving new technologies and channels,

such as social media.

Cybersecurity is a major

preoccupation for many FS boards.

More than a third of BCM directors say

their boards spend at least 10% of board

time discussing cybersecurity. Even so,

only about 40% are “very comfortable”

with their cyber risk efforts and 38% of

FS directors say their board has

discussed an actual cyber breach in the

past year.

FS directors are confident in their

boards’ risk management abilities,

but there is room for improvement.

Forty-four percent rate their boards’

practices as “excellent,” but 55% say

more time should be devoted to risk

management.

The job is getting more taxing.

Nearly a third of FS directors devote at

least 16 hours per year to outside

education. Most say the mechanics of

board meetings should change to be

more spontaneous and less scripted or

controlled.

Given the challenges, everybody at the table

is expected to contribute. FS directors need

to have the skills and time to do the job

effectively, as well as the ability to adapt as

priorities change. Fortunately, there’s no

need to go it alone. There are steps directors

can take to stay on top of reporting, hold

more productive meetings, and more. By

focusing on industry leading practices, they

may find that they get better results and

enjoy the process more. That’s a benefit for

everyone.

Across the boards:


An in-depth discussion

42% feel that

someone on their

board should be

replaced, an

increase from

34% in 2014.

………………………..…..…1 For more information, see “Board governance: Higher expectations, but better practices,” PwC, January 2016, www.pwc.com.

Board composition under

greater scrutiny

Board composition is getting more attention

from regulators, shareholders, and proxy

advisory firms.1 Composition has also

become a priority for FS boards simply

because they need specialized expertise to

oversee day-to-day compliance activities. Of

the FS directors surveyed, 42% feel that

someone on their board should be replaced,

an increase from 34% in 2014. The primary

reasons FS directors cite include peers who

are considered too old or who come to

meetings unprepared. Boards need directors

who can contribute new ideas, expertise, and

different perspectives to the team.

Looking for expertise

Financial institutions should evaluate if their

board has the right team members to face

continuously evolving challenges. In general,

firms are strongest when they have directors

who bring a range of experience and talent

together into a cohesive, high-performing

team. Diverse boards are more likely to have

robust discussions about the issues they

face, and this leads to stronger governance

over the business as a whole.

Figure 1: Most desirable board attributes for FS boards compared with all industries.

Across the boards:


………………………..…..…2 For more information, see “Board composition: Key trends and developments,” PwC, May 2016, www.pwc.com.3 Aguilar, Luis A. “Board Diversity: Why It Matters and How to Improve It.” Speech by SEC Commissioner, Agenda Luncheon Program, November 4, 2010. Accessed

March 2, 2016, www.sec.gov.4 SEC. “SEC Adopts Rules for Say-on-Pay and Golden Parachute Compensation as Required Under Dodd-Frank Act.” Accessed March 2, 2016.www.sec.gov.

The range of desired backgrounds for board

members reflects the growing outside

scrutiny of board operations. It reflects the

nature of the FS industry, too. As shown in

Figure 1, FS directors describe financial and

risk management expertise as very

important traits (94% and 85%,

respectively). Cyber risk and IT strategy

experience are also more highly valued by FS

directors compared with other industries. In

contrast, operational experience is

considered very important by only 48% of

FS directors, compared with 66% across all

industry respondents.

Keeping the board fresh and diverse

FS boards should regularly examine their

composition with an eye to adding new

ideas, expertise, and different perspectives.2

This can help them address today’s strategic,

regulatory, technology, and governance

challenges. FS directors are also embracing

the notion—promoted by the Securities and

Exchange Commission, among others—that

greater diversity can improve corporate

governance and enhance company

performance.3

In practice, however, there are both personal

and practical roadblocks to updating boards

in a way that most FS directors say is

desirable. For example, personal friendships

can prevent board leaders from asking

colleagues to forego re-election. While such

conversations can be difficult, today’s good

governance practices demand that directors

review performance as part of a plan to

refresh their board’s composition.

Some FS directors do appear aware of—and

willing to address—the challenges. Fifty-five

percent believe more time should be devoted

to director succession planning. This is

similar to the share of all corporate directors

who say this. The most common practice

includes adopting mandatory retirement

policies, which have been adopted or

discussed by 59% of FS boards, and director

term limits (30%). On diversity, while 32%

of FS directors agree very much that racial

and gender diversity on the board can

enhance company performance, it is not

always easy to change. In fact, 21% still cite a

shortage of qualified candidates. This might

be partly explained by the nature of the

business. FS company boards tend to have

more sitting and former CEOs, which could

limit the number of diverse candidates

available.

Going forward, we expect to see directors

devoting greater attention to board

composition. This can help to increase

diversity, meet evolving demands, and

attract new board members with new ideas.

Shareholdercommunications/activism

Talking more with shareholders

Board members everywhere are becoming

more comfortable discussing important

issues with their largest shareholders, and

FS directors are no exception. One third of

FS respondents now say it’s very appropriate

to engage with shareholders about board

composition, management performance,

and financial oversight—a significant

increase from 2014. And 38% now think it’s

very appropriate to talk with shareholders

about CEO pay, up from 31% the previous

year.

Several factors are driving this trend toward

openness. Many directors have been left

with little choice but to engage, given recent

governance initiatives such as:

Non-binding “say on pay” shareholder

resolutions on executive compensation.4

Proxy access proposals that would open

up board nominations to shareholders.

Annual elections instead of staggered

elections.

Across the boards:


………………………..…..…5 For more information, see “Shareholder Activism—Who, what, when, and how?” PwC, March 2015, www.pwc.com.6 For more information, see “Why the Banking Industry Needs $600 Billion Worth of M&A,” strategy+business, May 2016, www.strategy-business.com.7 For more information, see “Board composition: Key trends and developments,” PwC, May 2016, www.pwc.com.

Philosophically, directors have become more

open to the idea that shareholders—

especially larger ones with long-term

holdings—are entitled as owners of the

company to talk with board representatives,

not just the CEO.

Two thirds of FS directors now

report that they communicate

regularly with their largest

shareholders.

FS boards are also giving more thought to

the rules and processes that govern

communications with shareholders. Half of

FS directors say their boards have discussed

establishing protocols that define

permissible topics and preparations for

shareholder interactions. Fifty-seven

percent have discussed establishing a

process for shareholders to request direct

dialogue with the board, and 58% have

discussed or identified specific directors to

engage in those interactions when they

occur. Still, the figures for FS boards lag

slightly behind the results for boards in all

other industries.

Maintaining a proactive dialogue about

long-term strategy with large, longer-term

shareholders carries some practical benefits,

too. As owners of other companies, investors

can sometimes offer insights into what

industry competitors are doing. Regular

discussions with shareholders about long-

term strategy are considered one of the best

defenses against shareholder activism,

which has become prevalent in corporate

America and is expected to become a greater

concern in the FS industry in the future.

Interacting more with activists

We define “activism” as activities by one or

more of a publicly-traded company’s

shareholders that are intended to result in

one or more changes. In the financial

services industry, activists may be spurred to

action because of shares trading below

tangible book value.5 In recent years, FS

directors have felt more insulated from the

effects of activism than directors in other

industries. Hedge fund activists, for

example, typically press to increase

shareholder value by proposing changes to

strategy or capital allocation. For financial

institutions, these moves often require

regulatory approval. Given the operational

issues surrounding the financial crisis of

2007-2009, few activists thought they’d be

able to petition regulators for approval on

unsolicited combinations.

Fast forward to today: the economy has

improved and regulatory agencies are

showing a greater willingness to consider

mergers and other value-enhancing

strategies. The primary driver for M&A

activity is the difficulty that financial

institutions face in raising profits. Almost all

US banks are facing significant profitability

problems: In 2014, returns on equity for

74% of banks with $10 billion to

$150 billion in assets were below their long-

term cost of capital (approximately 10%). As

a result, price-to-book-value ratios are low

by historical standards, and that makes the

US banking sector an attractive hunting

ground for potential foreign acquirers and

activist investors.6 Given all this, it’s not

surprising that FS directors are interacting

more with activists than they did in 2014

(see Figure 2 on the next page).7

Across the boards:


………………………..…..…8 For more information, see “Shareholder Activism: Strategies for mitigating risk and responding effectively?” Strategy&, March 2015, www.pwc.com.9 For more information, see “Directors and IT: A user-friendly board guide for effective information technology oversight,” PwC, January 2016, www.pwc.com.

Despite this increase, activism remains less

of an issue in financial services than in other

industries.

Only 33% of FS directors report

being at least somewhat concerned

about an activist intervention,

compared with 48% of all

industry directors.

Additionally, just 25% of FS directors say

their boards sought advice regarding

activism from a third party, compared with

37% of all corporate directors. As the

industry’s health continues to improve and

shareholders become more assertive, we

expect to see more shareholders, including

activists, demanding face time with FS

boards.8

Information technologystrategy

Digging into IT strategies and budgets

Few industries rely more on technology—or

are potentially more threatened by it—than

financial services, and this is reflected in

board engagement.9 FS directors in our

survey report being more engaged than their

non-FS peers in virtually everything IT-

related, from spending decisions to social-

media strategy. About 70% of FS directors

report being at least moderately engaged in

oversight of the IT budget process, with

BCM directors topping the list at 77%. The

percentage of FS directors reporting their

boards are very engaged in overseeing

implementation of major IT projects is

46%—up from 27% in 2014 and notably

higher than the 38% of all corporate

directors in 2015 (see Figure 3 on next

page).

Figure 2: Directors in all FS sectors are having more interactions with activists thanthey did in 2014.

Across the boards:


………………………..…..…10 For more information, see “Bringing Tech Insight to Corporate Boards,” strategy+business, April 2016, www.strategy-business.com.

Keeping up with emerging technologies

A board that focuses exclusively on the

regulatory compliance challenges of today

will likely be unprepared for the emerging

trends of tomorrow. The board should

realize the importance of keeping up with—

and getting the help needed to understand—

changing technology trends. But keeping up

is challenging. FS directors should grasp the

implications, both pro and con, of existing

and new technologies on their businesses.

They should also understand how

technology can improve operational

efficiency and how technology advances can

impact IT budgets. FS directors say they are

willing to do the work necessary to oversee

these functions, but they also acknowledge

the limits of their own IT knowledge.

More than half (55%) report that their

boards use outside consultants (either on a

project-specific or continuous basis) to help

with IT implementations. FS directors also

are showing an admirable ability to adapt

quickly to new challenges. For example, 63%

say their boards are at least moderately

engaged in overseeing the company’s efforts

to leverage social media—up from 44% the

prior year and more than the 49% reported

by all corporate directors. Social media, like

cybercrime, can spiral out of control quickly.

As IT’s influence on the FS industry

continues to rise and new issues and

technologies emerge, boards can expect that

they’ll need to devote even more time and

energy to IT’s impact on their companies.10

Figure 3: FS directors are more engaged in IT strategy and project implementations thandirectors across all industries.

Across the boards:


………………………..…..…11 For more information, see “Financial Crimes Reporter, Cyber: Sharper rules for market infrastructure,” PwC, December 2015, www.pwc.com.12 For more information, see FFIEC’s “Cybersecurity Assessment Tool,” Accessed March 2, 2016, www.ffiec.gov.13 For more information, see “The Global State of Information Security® Survey 2016,” PwC, January 2016, www.pwc.com.14 Ibid.

Cyber and IT risk

Feeling under attack

Financial institutions have grown

increasingly reliant on technology to manage

customers’ funds and private information.

Unfortunately, the number of attempted

breaches is also on the rise, including

attempts by hacktivists, employees, third-

party service providers, terrorist groups,

organized crime, competitors, and even

nation states.

Nearly half (46%) of BCM directors

and 40% of insurance company

board members say their boards

discussed a specific cyber breach

during the previous year, compared

with 35% of non-FS directors.

Regulators are placing special emphasis on

FS boards’ roles in safeguarding their

institutions against cyber threats.11 In 2015,

the Federal Financial Institutions

Examination Council issued a cybersecurity

assessment tool that will be used in BCM

regulatory examinations in the future.12

Against this backdrop, FS boards are

devoting more time to understanding the

cyber threat landscape, and spending more

money on information security—up an

average of 14%, according to PwC’s 2016

Global State of Information Survey.13 Key

priorities include cloud-based cybersecurity

services, big data analytics, advanced

authentication for mobile-device

interactions, and monitoring and improving

security of third-party vendors.14

As shown in Figure 4, only 39% of FS

directors say they’re very comfortable that

their companies have identified their most

sensitive digital assets, adequately tested

incident responses, or have devised

comprehensive plans to address data

security. Reflecting this uncertainty, 69% of

FS directors say their boards have discussed

cyber insurance coverage, compared with

52% of all corporate directors. Banks, in

particular, are focused on cyberattacks, with

56% of BCM directors reporting that their

boards are very engaged in overseeing the

risks associated with a cyberattack

(compared with 40% for insurance company

directors and 35% of AWM directors).

Despite such efforts, there’s still a lot of

unease: just 14% of FS directors say they’re

very comfortable that their companies have

identified potential attackers.

Across the boards:


Spending on cybersecurity continues to

increase

While FS directors appear willing to spend

as much as necessary to prevent breaches

from occurring, they want to focus their

efforts on preventing large cyber breaches.

Directors are now more likely to challenge

whether or not chief information security

officers (CISOs) are prioritizing spending in

the right way. One common question: “If

your budget increased by another 5%, what

would you spend it on?” It’s very helpful for

directors to understand what other

companies are doing when it comes to this.

In order to find out what other companies

are doing, more FS directors are asking

consultants to assess the cost and

effectiveness of their institution’s

cybersecurity efforts.

Getting more sophisticated about IT

risk oversight, yet uncertainties remain

For a growing number of financial

institutions, boards understand the risks

and opportunities that IT presents, and

they’re stepping up their involvement. It

seems, however, that FS sectors vary in who

primarily oversees IT risk: the full board, the

audit committee, a separate IT committee, a

separate risk committee, or no board

oversight. BCM directors are much more

likely to assign board-level oversight of IT

risk to a risk committee (48%), for example,

while 58% of AWM directors and 42% of

insurance directors give that oversight

responsibility to the audit committee.

Outside the industry, just 14% of boards

assign oversight of IT risk to a separate risk

or IT committee.

Figure 4: Compared with all boards, FS boards are more comfortable identifyingwho is responsible for digital security.

Across the boards:


Sixty-three percent of FS directors say their

boards have at least discussed designating a

CISO, compared with just 39% of all

corporate directors. At most larger financial

institutions, in fact, CISOs are now common,

and they typically report to the board at least

once a year. CISOs at larger institutions

frequently have some sort of direct reporting

relationship with the chairman of the board

committee charged with IT risk oversight,

too.

Risk management

Feeling confident about risk

management expertise

Financial institutions generate revenues by

taking measured risks. Because of this, it

should be no surprise that FS directors rate

their own boards’ risk management

capabilities as excellent compared with

other industries (see Figure 5). Consider:

Forty-four percent of all FS directors

(and 56% of BCM directors) judge their

boards’ capabilities to quantify risk as

excellent, compared with 30% for all

corporate directors.

Thirty-nine percent of FS directors (and

52% of BCM members) deem their

boards’ abilities to integrate risk with

strategy as excellent, compared with 30%

for all corporate directors.

Mapping specific risks to

committees/boards is viewed as another

relative strength, with 51% rating their

boards as excellent, compared with 37%


Assessing reputation risk is a strength of

FS directors, with 40% rating their

boards as excellent, compared with 32%


Figure 5: FS board members assess their board’s performance as excellent moreoften than directors in all industries.

Across the boards:


………………………..…..…15 For more information, see “Cure for the common culture: How to build a healthy risk culture,” PwC, October 2014, www.pwc.com.16 McCormick, Emily. “2016 Risk Practices Survey: Banks Beef Up on Cybersecurity.” Bank Director, March 21, 2016. Accessed April 28, 2016. www.bankdirector.com.

While FS directors are more confident in

their risk management acumen than those in

other industries, the numbers also suggest

that FS directors are becoming less

comfortable with their understanding of the

discipline. Fifty-five percent of FS directors

say their boards should spend more time on

risk management than they do—up from

46% last year.

Compliance-related risks are

understandably a major source of concern.

Lawmakers and regulators have added

thousands of new laws and rules as they

consider the root causes for last decade’s

financial crisis. From stress tests to the

Consumer Financial Protection Bureau, the

costs and complexities of compliance—and

an emphasis on board accountability—have

made risk management expertise a must-

have for all boards. While an impressive

62% of all corporate directors rated having

risk management expertise on the board as

very important, the percentages rise to 85%

for FS directors and even higher (96%) for

BCM directors.

While directors don’t need to be operational-

risk experts, they are expected to craft risk-

appetite statements that set appropriate

thresholds. They should be able to define the

types of risks an institution is willing to

accept as part of its business strategy. They

should also be able to challenge

management when questions arise. It is no

longer unusual for boards to order

adjustments when management’s strategy

doesn’t fit the established risk appetite.

Boards should also work to establish and

enforce risk cultures in which employees

adhere to agreed-upon standards. That

means reviewing incentive compensation

programs to make sure that they reward

good risk management practices and

penalize bad ones. It also means fostering a

cultural “tone at the top” that models

desired behaviors in visible ways.15

Managing and responding to crises

FS boards oversee complex risk areas such

as Bank Secrecy Act compliance and

associated anti-money laundering efforts, to

name a few. Part of this responsibility

includes having plans for addressing crises

as diverse as a large cyber breach or the

sudden departure of a CEO.

FS directors appear well prepared to handle

potential crises, but some sectors are more

ready than others:

In banking and capital markets, 90% of

directors say they have discussed

management’s plan to respond to a major

crisis, compared with 77% for all

corporate directors.

In both BCM and insurance, 77% say they

have discussed testing those plans,

compared with 61% of all corporate

directors.

In asset and wealth management, we see

potential room for improvement. Just

42% have discussed management’s

testing of the company’s crisis response

plan.

Given the pace of change, FS directors need

to actively monitor evolving regulations and

understand how changes can affect their

firms. They also need guidance on how to

perform the board’s risk management tasks

effectively. We recommend the following

three steps to get started:

If your board doesn’t already have a

separate risk committee, set one up.

Financial institutions with more than

$50 billion in assets are required to do

this, and a 2016 survey by Bank Director

magazine found that 48% of US banks

with assets greater than $500 million

already have a board-level risk

committee.16

Across the boards:


62% of FS

directors believe

their boards should

devote more time to

strategic planning,

a slight increase

from 59% in 2014.

………………………..…..…17 McCormick, Emily. “2015 Compensation Survey: What Executives and Board Members Want.” Bank Director, May 20, 2015. Accessed March 25, 2016.

www.bankdirector.com

Build systems that create risk-related

reports that your board can actually use,

drawing on the millions of pages of data

that a typical financial institution

generates.

Seek outside education to learn the

increasingly technical language of risk

management.

Board practices

Devoting more time and effort to the job

For FS directors, the world has changed

considerably over the past few decades.

Today, the compliance and enforcement

environments are far more complex, the

strategic challenges are more daunting, and

the chances of a cyber breach or some other

crisis are higher. In short, while being an FS

director still carries rewards, it is also highly

scrutinized and time-consuming.

To keep pace, many FS directors and their

boards are devoting more time and effort to

the job. According to our survey, 38% of

BCM directors and 32% of insurance

directors participated in at least 16 hours of

outside board education last year, compared

with only 25% of all corporate directors

spending that much time. For now, asset

and wealth management directors remain an

exception—only 19% of them reported

participating in more than 16 hours of

training.

Many bank directors are expressing concern

about how they use their time, as well as

how much time they’ve committed. The

median amount of time that bank directors

devoted to board obligations last year was

20 hours per month, according to the Bank

Director survey, up 33% from the year

before.17 And directors report that much of

that time is spent “deep in the weeds.”

Many people join the board of a financial

institution with visions of setting the

company’s long-term strategy, preparing for

CEO succession planning, and revising

capital allocation plans. What they find

instead is that much of their time is spent on

compliance, including a growing list of

regulator-required tasks. This frustration is

reflected in the numbers. For example, 62%

of FS directors believe their boards should

devote more time to strategic planning, a

slight increase from 59% in 2014 (see Figure

6 on the next page). Seventy percent would

like to spend more time on IT risks,

including cybersecurity, compared with 63%

a year earlier.

On the positive side, FS directors appear

relatively comfortable with the time devoted

to other key topics. Fifty percent say they’re

spending enough time on IT strategy, an

improvement from 41% in 2014. Fifty-seven

percent of FS directors say they’re happy

with the time spent on talent management,

compared with 49% for all corporate

directors. And 59% say the time spent

assessing industry competitors is sufficient,

compared with 53% for all corporate

directors.

Across the boards:


Changing the mechanics of board

meetings

FS directors believe their boards would

benefit from more free-flowing discussions

and more relevant and better-organized

materials. Fifty-seven percent wish board

presentations were less formalized and

involved more spontaneous discussion, and

45% wish board discussions with

management were less scripted or

controlled. Many also wish that board

materials were at least somewhat shorter

(60% versus 51% for all corporate

directors), contained less industry jargon

(47% versus 40%), and were scrutinized

better to remove outdated information (45%

versus 35%). While these findings may not

surprise many readers, they do point to

some relatively straightforward

opportunities for improvement. Given the

regulatory environment and the need to stay

informed about so many key subjects, we

anticipate that FS directors will need to

devote even more time and effort in the

future.

Figure 6: Most directors in all industries believe their boards should devote moretime and focus discussing strategic planning.

Across the boards:


What this means for your business

At financial institutions, the role of board

members is more challenging and requires

more responsibility than ever. In our 2015

Annual Corporate Directors Survey, we see

that today’s FS boards are confronting

multiple challenges with varying degrees of

success and satisfaction. From the outside,

they are faced with a difficult operating

environment, newly assertive shareholders,

growing cyber threats, and intense

regulatory scrutiny. FS directors are also

grappling with plenty of internal issues,

including risk appetite, culture, IT strategy,

and more.

The most effective boards are those that

recognize the challenge and take steps to

meet it:

Look for opportunities to add members

with diverse opinions and backgrounds.

Build a board with the right skills and

time to do the job well as well as the

ability to adapt as priorities change.

Get (and stay) informed about emerging

technology and cybersecurity.

Create a separate risk committee if you

don’t already have one. Don’t be afraid to

seek help when preparing for a potential

crisis.

Change the fundamentals of board

meetings to allow for a freer exchange of

ideas.

It’s a huge job. With the right expertise and

the willingness and time to put in the work,

FS directors can provide the proper

oversight across the board.

www.pwc.com/fsi

“Across the boards: Views from the financial services boardroom,” PwC, May 2016, www.pwc.com/fsi.

© 2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwCnetwork. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general informationpurposes only, and should not be used as a substitute for consultation with professional advisors.

For a deeper conversation, please contact:

Paula Loop(646) 471-1881

[email protected]

www.linkedin.com/in/paulaloop1

John Stadtler(617) 530-7600

[email protected]

https://www.linkedin.com/in/johnstadtler

Michael Alix(646) 471-3724

[email protected]

www.linkedin.com/in/michael-alix-0947288

Joseph Nocera(312) 298-2745

[email protected]

www.linkedin.com/in/jnocera

Paul DeNicola(646) 471-8897

[email protected]

www.linkedin.com/in/pauldenicola

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A publication of PwC’sFinancial Services Institute

Marie CarrPrincipal

Cathryn MarshFSI Leader

John AbrahamsDirector

Ryan AlvanosSenior Manager

Gregory FilceSenior Manager

Kristen GrigorescuSenior Manager

across the boards: views from the financial services boardroom - pwc · 2016-10-27 · across the...

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