Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • April 2012
04

Banks must take action on risk management, says Sants

Open-access content 24th April 2012

More progress still needs to be made on delivery effective corporate governance and risk management in the banking sector, the chief executive of the Financial Services Authority, Hector Sants, said today.

2

Delivering what he said would be his last speech as the head of the regulator, Mr Sants told an audience in London that effective corporate governance was crucial to delivering trustworthy financial markets and institutions.

Inadequate capital and liquidity standards in banking, which had been the main regulatory deficiency pre-crisis, were being addressed, he said, but less had been done to improve the governance and risk management.

'Management are responsible for running firms and ultimately firms fail because of the decisions taken by their boards and their management. These decisions are made within a firm's corporate governance framework,' he said.

'The crisis exposed significant shortcomings in the governance and risk management of firms and the culture and ethics which underpin them.  This is not principally a structural issue.  It is a failure in behaviour, attitude and in some cases, competence.'

Mr Sants said the crisis had exposed that there were many senior executives and non-executives in key board positions who lacked the technical skills to manage the risks in their banks. The FSA seeks to address this by assessing the suitability of a candidate to undertake a role using the Significant Influence Function interview process.

This ensures an appropriately robust, rigorous and proportionate appointment process is undertaken by the firm, taking into account the overall composition of the board and the individual's knowledge and competence, he added.

'The FSA is certainly not trying to be 'gate keeper' to everyone,' Mr Sants said.  'When we revised our SIF process we made clear that our focus is on the Chair, the senior independent director, the chair of the risk and audit committee and on the principal executive functions: CEO, finance director and chief risk officer.

'Outside of these functions the need for an interview for other individuals is judged on a firm specific basis.'

He stressed, as well, that the FSA did not expect all non-executive directors to be technical experts in financial services or for all board members to have the same level of technical knowledge.

'A diverse board encourages creativity and is less likely to demonstrate "group think" and "herd mentality",' he said.

This article appeared in our April 2012 issue of The Actuary.
Click here to view this issue
Filed in:
04
Topics:
Regulation Standards
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Capital contractor

England, London
£700 - £1000 per day
Reference
118813

Senior Financial Risk Actuary

London, England
£55000 - £100000 per annum
Reference
118812

Pricing Technology Lead

England, London
£60000 - £70000 per annum
Reference
118811
See all jobs »
 
 

Most-Popular

 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200