In a recent blog post, Frank Elderson, a member of the executive board of the European Central Bank (ECB) and vice-chair of the Supervisory Board of the ECB, reflects on the failure of Silicon Valley Bank and how it has reinforced the importance of effective risk governance.
The report by the US Federal Reserve's Vice Chair for Supervision, Michael Barr, on the bank's collapse identified failures by the board of directors and management to manage their risks adequately. "Effective governance is a key element underpinning several of the Basel Committee on Banking Supervision principles that guide prudential supervisors around the world," Elderson writes. "In banking supervision, we see all too often that the root cause of various vulnerabilities in banks lies in ineffective management bodies."
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