Corporate Governance Issues For Smaller Financial Institutions

On May 24, 2012, OSFI Superintendent Julie Dickson delivered a speech to the Trust Companies Association of Canada.  The speech was focused on highlighting certain governance issues especially relevant to smaller financial institutions.

The following issues were discussed:

• Lack of Diversification: Because smaller financial institutions generally have a lack of diversification in product lines and operations, there is little room for error. As a result, strong governance practices and a thorough understanding of the risks that are being taken are critical. The board of directors should develop a well thought out risk appetite as well as a strategy to deal with risks. The risk appetite and the strategy should be communicated throughout the institution and put into measurable terms that can be monitored.