The American Association of Bank Directors (AABD) encourages every bank board to undertake an annual assessment of board governance. This regular assessment process will provide your board with the opportunity for early intervention when potential governance issues develop. This document provides some general governance topics for your board’s consideration.
The AABD recommends a 360° assessment of board governance including [a] a self-assessment by each board member, [b] a group assessment by each board member and [c] an assessment of board governance by executive management.
The AABD will provide an independent review of the attached governance assessment materials at a reduced fee for AABD Premium Members. The AABD assessment may also include individual interviews and a review of board governance policy and practice if requested. Visitwww.AABD.org or contact David Baris (DBaris@AABD.org or call 202-463-4888) for additional information about these and other AABD services.
Independent third-party assessments, such as provided by the AABD, help insure that all individual assessments remain confidential and encourage candor. The AABD recommends third-party assessments at least once every five years. These documents may also be used for a self-assessment and reviewed internally by your Lead Director, Chair of the Governance Committee or other designated individual.
As a guiding principle, every bank director owes a Duty of Loyalty and a Duty of Care to their financial institution and board members are always expected to act in the best interests of the financial institution. In considering the best interests of the institution, a director may consider the effects of board action on shareholders, employees, customers, communities served by the institution and other factors the director, in good faith, considers pertinent.
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