June 17, 2023 / VOLUME NO. 266

Playing Devil’s Advocate

Are too many bank boardrooms plagued by a consensus culture?

Earlier this week, Sydney Menefee, a partner at Crowe LLP and former senior deputy comptroller at the Office of the Comptroller of the Currency, listed “consensus culture” as a contributor to ineffective governance and oversight in her presentation to bank board members and executives at Bank Director’s Bank Audit & Risk Conference in Chicago. One symptom of an unhealthy culture is a lack of conflict and confrontation.

In contrast, credible challenge — a risk oversight practice in which directors probe management’s actions through thoughtful questions — “is necessary to build resiliency,” she shared. Put simply, the long-term health of a financial institution depends on engaged, insightful directors.

With heightened anxiety around liquidity, credit risk and what’s coming down the pike from regulators, boards should understand that strategic decisions require honest, frank conversations. But Menefee said one ingredient is missing from too many boardrooms: one or more directors who can provide a different point of view and push back on what others think.

It’s important to note what Menefee was not saying. She didn’t advocate for a disruptor, or someone to dominate board meetings or shout fellow directors down. That’s not productive. Mutual respect should form the foundation for conversations in the boardroom. And while a devil’s advocate or two could help propel a discussion, ultimately the board should land on the same page when it comes to the bank’s vision and strategy.

Being an effective director requires courage, one of the desired attributes from our Bank Director Certification Workshop, held in advance of the conference. We define courage in the boardroom as a willingness to deal with tough issues. Directors should also have the intellectual curiosity required to engage with the world around them, and should be willing to hold themselves, their fellow directors and bank management accountable for making decisions in the best interest of the organization and ultimately, shareholders. 

Asking tough questions shouldn’t be seen as controversial — it’s the board’s job. If everyone starts important discussions in full agreement, then there’s no real discussion taking place. 

That’s not a sign of a healthy culture. It’s a sign of complacency.

• Emily McCormick, vice president of editorial & research for Bank Director

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