Learning from regulatory downgrades – a clear view…
Phil Morgan’s excellent analysis of “Learning from regulatory downgrades” looks at over 100 governance downgrades from the last five years. The key theme he identifies is that it is essential to ensure that your organisation develops good governance.
Boards need to be in a position to “get it right” and ensure that the strategies of the organisation are robustly stress tested. They need to have clear oversight of what is going on in order to be able to ask the right probing questions and challenge effectively.
Phil’s lessons from regulatory downgrades can be summarised into these four broad areas:
- Regulation and Boards
- Consumer standards
Regulation and Boards
Co-regulation requires Boards to ensure that the Regulatory Framework and relevant standards are understood and are met. Phil’s analysis found that some Boards don’t fully understand their role or the expectations of the standards and may even miss deadlines.
The Clearview Service Excellence module can help inform organisations about those standards that are pertinent, help to identify weaknesses and establish clear actions to address them or provide evidence where performance is good.
The Clearview Project module helps ensure that you meet the deadlines for regulatory reports and returns by capturing the work that needs doing and their deadlines and allow clearly dated tasks and milestones to be assigned to those responsible for delivering them.
Consumer regulation is not actively regulated, however, serious detriments have been flagged for breaches of health and safety regulations with resulting regulatory downgrades.
To prevent such detriments organisations could create performance indicators to monitor the adherence to regulations (e.g. % properties with a valid gas safety certificate) and establish activity plans to capture the remedial actions required and to ensure that they are undertaken in a timely manner. In this way Clearview can help your Board and Exec oversee good practices and procedures and thereby avoid systemic failures.
Hubris – the threat to good governance
Social landlords choose their preferred Code of Governance, however, they are then required to ensure that this is complied with. Organisations have been downgraded where reviews have shown that compliance is poor and rules have been broken.
In addition, as organisations seek to diversify their operations the skill sets required by Board members are becoming increasingly broad and the annual board appraisals need to be effective.
Clearview can be used to capture Code of Governance actions to ensure that they don’t “drop off the radar”. For example, plans for succession could be captured and reviewed in plenty of time before any “9 year rules” are breached.
The Clearview Personal Performance module can be used to create idealised sets of core competencies for Board members, identify where weaknesses and learning and development interventions are required and ensure that these are delivered.
Risk, internal controls and sound financial planning
“Do risk properly” is one of the key points outlined by Phil. Robust risk frameworks that are actively monitored and used to drive mitigation and improvement are essential especially through periods of strategic change. Poor internal control systems, a lack of a systematic approach and limited assurance all lead to potential downgrades.
However, Boards and Exec can stay alerted to when mitigating actions are required through close monitoring of Key Performance Indicators and through regular reviews of the risk matrix and register where strategic risks are clearly linked to the goals of the organisation. Clearview embeds a three lines of defence model so Boards can gain greater assurance that controls are effective. Attention can then be focussed onto those areas where performance is lacking.
In essence, the message from the Regulator is that Boards need to develop effective oversight of their organisation. Clearview can provide both Board and Exec with the tools that they need to capture and actively monitor their strategic performance; control associated risks; and to scan the horizon in order to identify potential threats and emerging opportunities
So if you want to help your Boards and Exec improve their ability to proactively monitor your business plans, review KPI performance and control risks please get in touch.