Governance body
A governance body is a board, committee or other formally mandated forum that takes or oversees decisions within defined competences, membership and reporting lines.
Swiss banks separate the board of directors (Verwaltungsrat), which is responsible for overall direction, supervision and control, from the executive board (Geschäftsleitung), which runs the business. The German two-tier equivalents are the supervisory board (Aufsichtsrat) and the management board (Vorstand). Below them sit committees with delegated mandates, such as audit, risk, credit, model or IT committees.
FINMA Circular 2017/1 requires at least one third of the board of directors to be independent and requires institutions in supervisory categories 1 to 3 to establish an audit committee and a risk committee. DORA makes the management body define, approve, oversee and answer for ICT risk management. MaRisk makes all members of the executive board jointly responsible for a proper business organisation and requires them to inform the supervisory body about the risk situation at least quarterly.
Pitfalls include committees whose mandates overlap or leave gaps, decisions taken outside the competent body, minutes that do not record the challenge raised, and escalation paths that exist on paper but are never used.
In practice
- 01Documents each body’s mandate, composition, quorum, decision powers and reporting line in an organisational regulation or charter.
- 02Maps escalation paths between bodies and checks that issues actually reach the board.
- 03Keeps minutes that record decisions, dissenting views and follow-up actions with owners.
- 04Reviews the committee structure and its effectiveness periodically, including member independence and expertise.
Sources
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