Remarks by Superintendent Julie Dickson OSFI to the 2009 Financial Services Invitational Forum

Economic and Financial Turmoil: Are there Lessons for Boards?

May, 2009 – As some of you know, in my last two speeches at this Forum I have used television themes as a backdrop to my remarks. In spring 2007, I talked about sows ears (sub prime mortgages) being turned into silk purses (AAA securities), using the “Bewitched” theme. Last year I talked about risk management using “Bonanza”, with the Cartwright’s management of the Ponderosa Ranch as the theme. This year I thought I would use a television series that aired from 1966 to 1973 and which also inspired two motion pictures: Mission Impossible.

In selecting “Mission Impossible” I am not implying that the challenges that we face in getting the global financial system and economic growth back on track are insurmountable.

Mission Impossible also does not mean that the recommendations made by the G-20, such as extending the regulatory perimeter, and determining what is systemic, are impossible — though I think these areas are very challenging.

I selected Mission Impossible as a theme because the series is a good way to talk about boards of directors and corporate governance. Effective governance matters right now. While board performance in the years leading up to the turmoil is the subject of some debate globally, board performance is critical now as financial institutions respond to financial market turmoil and the global recession.

Importance of Strong Board Governance

Because of the global market turmoil, around the world people are again asking, “where were the directors?” In a twist, some are adding “where were the shareholders?”

What kind of answers have people been providing? Some have suggested that the banking system’s complexity made it difficult for directors to exercise their responsibility. Others suggest that information that went to the board was so complex that it could not be grasped, and that those who prepared it could not distil complex subjects down into essential points.
We need better answers than that, and if we end up asking the same questions each and every time there is a major problem, but never acting, then something is wrong. Either directors are not doing what is expected of them, or the expectations of directors are far too high. The directors do not understand the mission or the mission instructions are not very clear.

Read the full remarks


In conclusion, my messages tonight are:

  • Governance matters now as financial institutions respond to financial market turmoil and the global recession. Any weaknesses need to be swiftly addressed.
  • Events suggest that many boards need to increase their involvement in setting risk appetite, overseeing management and compensation.
  • Financial institution boards should think carefully about adding directors with banking/insurance/risk management expertise, so as to deepen board discussions.
  • OSFI also needs to do more to assess boards’ effectiveness, especially in the areas of compensation and risk management, and has begun this effort.

About OSFI

OSFI is an independent agency of the Government of Canada. It reports to the Minister of Finance. For more information visit