250 584 4231 bill@billwilby.ca

      What Makes Good Governance?

      When I first became a credit union director, although I was eager to serve, I did not have a lot
      of knowledge about good governance. And what a difference good governance of an organization could make. For me the definition of governance is a culmination of all the policies, procedures, manuals, committees, work plans and terms of references. And how well these are implemented to provide control and oversight of an organization. Creating, maintaining and updating these governance fundamentals in a rapidly changing environment can be very challenging for an organization. 

      Steep Learning Curve

      As a newly elected director with a background of business and a strong desire to learn and understand, my first year was very challenging. It wasn’t until the end of the second year and the rotation of the yearly governance reviews had been completed, that I began to feel I had a basic understanding of the governance of a credit union. And it is important to note that each director and together the board, is legally responsible for the oversight and the governance of a credit union. This is a responsibility not to be taken lightly. The credit union members’ life savings are at risk if the governance is inadequate. I was fortunate to begin my director experience and training with a credit union with a history of sound governance. Enter now the regulator to the governance conversation.

      Governance Oversight

      The financial services regular for B.C. is the British Columbia Financial Services Authority, (BCFSA). BCFSA plays a very important role in the governance of credit unions. I see their role as an expanded building inspector role. An expanded role because the process is ongoing. Credit unions report financial information monthly to the regulator. There is constant contact between the BCFSA relationship manager and the credit union management. And credit unions are required to report any potential changes regarding risks to the organization. The regulator also performs onsite visits to do a deep dive into the governance of a credit union. Important because of the constant change and the need for governance to stay ahead of the changing financial environment. The regulator’s role is very important for good governance in the B.C. credit union system. Unique in Canada, Stabilization Central Credit Union also plays a role in the governance of B.C. credit unions. 

      System Risk Mitigation

      As stated earlier I was fortunate to begin learning at Grand Forks Credit Union. I was even more fortunate to be elected to the board of Stabilization Central Credit Union, (SCCU). The members of SCCU are the credit unions of B.C. I served a three year term at SCCU and chaired the Master Bond Committee. SCCU’s mission is to add stability and to strengthen the B.C. credit union system. SCCU is often directed by BCFSA to provide services to individual credit unions. This would include help with individual credit unions governance. When BCFSA with their oversight determines a credit union is at risk then BCFSA develops a remediation plan to get things back on track. SCCU duties can be to oversee and assist in the remediation process.

      Lessons Learned

      Before serving on SCCU my only experience with governance issues that went off the rails were director training case studies. And those case studies were mostly corporate organizations like the classic ENRON case. It was easy to develop the attitude that in the credit union system with the tight oversight, controls and regulatory oversight that governance issues did not exist. That was quite a naïve view that I had developed. My experience as a director of SCCU provided me with a more complete view of governance and the oversight of a credit union. This new insight prompted a suggestion from me to the management of SCCU which has resulted in the SCCU educational series, Lessons Learned.

      To Summarize

      To summarize, governance requires a full set of dynamic controls, oversight by knowledgeable directors and a regulator. And most important, an organization culture that involves all employees, managers and directors dedicated to maintaining good governance.  

      I would like to hear your views or questions on governance, please leave a public comment. If you would like to ask a question or contact me directly then please use this contact form.