The presence of a dedicated risk
committee is still not a common
practice across large banks.
Table 1B: Board Committees Overseeing Risk —
Breakdown by Region
Banks with all-risks committee
Banks with risk committee
for specific risks
Audit committee only
Total
4
Europe
9
4
Total
17
3
3
10
3
9
21
0
0
4
6
12
35
Risk Committees Meet Relatively Infrequently
While frequent meetings are by no means sufficient for robust
risk governance, infrequent meetings suggest that the board
does not have enough time to review and discuss risk issues,
or to respond to any change in the risk profile of the bank
in a timely fashion. In the current environment, we believe
it would not be unreasonable to expect all-risks committee
meetings to be held on a bimonthly basis. The results, however, show that out of the 17 banks that have an all-risks committee, only 47% had more than six meetings in 2008 (see
Tables 2A and 2B, above right).
We acknowledge that in some instances there may have been
informal meetings of the risk committee, in addition to formal
meetings. However, this result, coupled with the fact that only
half of the banks in our sample have a dedicated all-risks board
committee, suggests that there is significant room for improvement, particularly in light of the recent financial crisis.
When looking at the results broken down by type of bank,
we note that of the all-risks committee, the percentage of
complex institutions that held four meetings or fewer in 2008
was 37%, compared to 22% for universal banks (see Table
2A).
The results by region indicate that four out of the eight
banks that held more than six risk committee meetings in
2008 are based in Europe. Two of these banks (both headquartered in Spain) held, respectively, 45 and 102 meetings.
These are significant outliers compared to other banks glob-
ally, which recorded a maximum of 10 meetings. However,
we note that in the case of both outliers, there is a significant
representation of non-independent members on the committee. The meeting frequency and committee composition of
these banks might suggest a potential blurring of the lines between oversight and management.
Table 2A: Meeting Frequency of the All-Risks
Board Committee in 2008 — Breakdown by
Type of Bank
Up to 4 meetings
Between 5 and 6 meetings
More than 6 meetings
Total
3
1
4
8
Universal
2
3
4
9
5
4
8
17
Table 2B: Meeting Frequency of the All-Risks
Board Committee in 2008 — Breakdown by
Region
Up to 4 meetings
Between 5 and 6 meetings
More than 6 meetings
Total
0
1
3
4
Europe
3
2
4
9
2
1
1
4
Total
5
4
8
17
Risk Committee Composition
Having a dedicated board committee that covers all risks and
that meets frequently is an important element of robust risk
governance for a bank, but by itself it is not sufficient. The
experience and independence of the members of the committee is as important as the existence of the committee itself. Our assessment of the 17 banks with all-risks committees
shows the following:
• Only one bank has a risk committee whose members are
both independent and have the appropriate risk and business
background, given the type of institution.
• In four of the banks, the members of the risk committee
are mainly former executives of the same institutions, and are
therefore not, strictly speaking, independent.
• Five banks have no (independent) committee member
