4 ways board members can manage risk in the face of bank failures

Get key insights from the latest Crowe financial services audit committee overview webinar on managing risk in the face of bank failures.

Leaders are tasked with managing risk in the face of bank failures. We outline four takeaways that can help.

Financial services leaders play an important role – not only in managing risk at their institutions but in using their skills and experience to be a calming influence during challenging circumstances, such as recent bank failures.

As shared during the recent Crowe webinar “June 2023 Financial Services Audit Committee Overview,” here are four key takeaways to further equip and empower leaders to manage risk in their own organizations and inform bank board discussions:

1. Challenge assumptions

In modern workplaces, it’s easy to fall into the trap of consensus culture, where conflict avoidance takes priority over professional rigor. But the organizations that tend to succeed are the ones that ask the hard questions, probe deeply into existing issues, and challenge accepted biases and norms. Diversity in perspective is crucial for managing risk. Bring these practices to your meetings and conversations.

2. Focus on managing risk, not just compliance

For financial institutions, regulatory compliance is just one component of the risk management framework. Make sure your board considers and actively discusses risks to the organization that go beyond regulatory noncompliance.

3. Test your contingency funding plan

Don’t wait until you actually need your contingency funding to test it. Before a crisis occurs, make sure you can access all funding sources contemplated in your contingency funding plan.

4. Review reports on failed banks from the Federal Reserve and the Federal Deposit Insurance Corp.

Take time to read “Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank" and “FDIC’s Supervision of Signature Bank,” and look for applications for your own organization. This is a great exercise for financial services boards and can spark discussions that help get everyone on the same page.

Listen to the full session

For more detailed commentary on the history of bank failures, an overview of the FDIC resolution process, and financial reporting observations watch the full webinar.

June 2023 financial services audit committee overview

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Sydney S. Menefee

Partner, Financial Services

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