The Walker Review of corporate governance in UK banks and other financial industry entities, led by Sir David Walker on behalf of the UK government has reported on its findings. The report makes 39 specific recommendations for ways in which banks and other financial industry entities (termed BOFI by the review) can enhance corporate governance.

Five of the recommendations relate specifically to risk governance and are as follows:

- The board of a BOFI should establish a board risk committee separately from the audit committee with responsibility for oversight and advice to the board on the current risk exposures of the entity and future risk strategy.

- In support of board-level risk governance, a BOFI board should be served by a Chief Risk Officer (CRO) who should participate in the risk management and oversight process at the highest level on an enterprise-wide basis and have a status of total independence from individual business units.

- The board risk committee should have access to and, in the normal course, expect to draw on external input to its work as a means of taking full account of relevant experience elsewhere and in challenging its analysis and assessment.

-In respect of a proposed strategic transaction involving acquisition or disposal, it should as a matter of good practice be for the board risk committee to oversee a due diligence appraisal of the proposition, drawing on external advice where appropriate and available, before the board takes a decision whether to proceed.

-The board risk committee (or board) risk report should be included as a separate report within the annual report and accounts. The report should describe the strategy of the entity in a risk management context, including information on the key exposures inherent in the strategy and the associated risk tolerance of the entity.

Read the report (PDF)

•Date: 16th July 2009• Region: UK •Type: Article •Topic: Financial sector
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