The Financial Crisis is Not Over, Yet

The work of the audit and risk committees of bank boards couldn’t be more important. The audit committee’s workload is so sizeable that many boards pay their directors extra to serve on the audit committee. Not all banks have a risk committee, but the ones that do are using them to take up the risk-related activities that have shifted to the board level in the wake of the financial crisis. Enterprise risk management, for example, which must be overseen at the board level, is no longer a practice conducted by big banks. I have found banks well below $1 billion in assets whose risk is mostly credit risk implementing enterprise-wide risk programs that take a broad look at the interwoven risks of the entire organization.

What I take away from all this is that the industry is still dealing with the fallout of the Great Recession. Profits are being made. Most U.S. banks are healthier than their European counterparts. Yet still, when it comes to the regulatory environment and the push for more risk oversight and audit scrutiny on the board level, we’re still knee deep in the Great Recession, make that, Great Catastrophe.

Evidence in point is the creation of the Consumer Financial Protection Bureau, which was born inside the Dodd-Frank Act of 2010. A recent CFPB case against PayPal has the banking industry worried about the definition of the word “abusive,” a phrase that was added to a 101-year-old consumer protection law, writes John Maxfield. Also, Adam O’Daniel writes about another exposure increasingly in the regulatory spotlight: vendor risk, and how best to protect your bank. John Engen writes about how banks are using social media to respond to a changing landscape of communication, and mitigate its risks. And finally, Karen Epper Hoffman writes about the sizeable threat of insider fraud at a financial institution, and which software programs are helping banks weed out the bad actors.

Bank boards have always had to worry about a variety of risks. Banking is all about managing risk. But increasingly, boards have to add regulatory risk, vendor risk and reputation risk to their list of worries.


Naomi Snyder


Editor-in-Chief Naomi Snyder is in charge of the editorial coverage at Bank Director. She oversees the magazine and the editorial team’s efforts on the Bank Director website, newsletter and special projects. She has more than two decades of experience in business journalism and spent 15 years as a newspaper reporter. She has a master’s degree in journalism from the University of Illinois and a bachelor’s degree from the University of Michigan.

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