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IntegrativeGovernance:GoverningWiselyandNavigatingWithExcellence

©2016IntegratedGovernanceSolutions,LLCAllRightsReserved.

GovernanceRe-Imagined….

….AsYourNavigationSystemAuthority>Decision-Making>Navigation

AGILITYResponding

toChange

PRECISIONHittingtheMark

SPEEDBeatingthe

Competition

ALTITUDEFlyingthe

Highest

MORALCOMPASSLivingYourValues

5CriticalElements:

DOESYOURNAVIGATIONSYSTEMHAVEWHATITTAKESFORSUCCESS?

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©2016IntegratedGovernanceSolutions,LLCAllRightsReserved.

Risk&RiskManagementDefined….

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Think: SStrengths

WWeaknesses

OOpportunities

TThreats

UpsideRisk=“CouldWe/ShouldWeTakeMORE Risk?”

DownsideRisk=“CouldWe/ShouldWeTakeLESS Risk?”

Ask:

Ask:

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MissionConsider: Strategy Operations Controls3

©2016IntegratedGovernanceSolutions,LLCAllRightsReserved.

IntegrativeGoverningRoles&Duties

Board Oversight Duties

Management Execution DutiesKeyDutiesIntegrativeDuty#1- Mission

IntegrativeDuty#2- Strategy

IntegrativeDuty#3- Operations

IntegrativeDuty#4- Controls

Fulfilling andstewardingthemission, vision andvirtuesethically.

Achievingthestrategyandoverseeingstrategicdirectionconsistentwithstrongcorporateresponsibility.

Drivingtheoperationsandoverseeingthedesiredrisk appetiteandprofile,consistentwithestablished risktolerances.

Creatingtheeffectivecontrolsandoverseeingthecontrolenvironment,whileensuringconsistent compliance.

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Monitoring Verification Duties

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Mission, Vision & VirtuesStewardship

Strategic Direction

Control Environment

Risk Appetite & Profile

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Mission, Vision & Virtues

Strategy

Operations & Risk Management

Controls

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2

3

4

Ethical Consistency

Strategic Responsibility

Control Compliance

Risk Tolerance Adherence

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3

4

Oversight

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©2016IntegratedGovernanceSolutions,LLCAllRightsReserved.

CriticalChallenge#2:Makingriskmanagementmorerelevant,value-

addedthroughrisk-informed decisions, sustainableovertimeandeffectiveinearlywarningoftrouble.

CriticalChallenge#1:Optimizingboardperformance, strategicguidance,

valuedeliveredandoversighteffectiveness.

CriticalChallenge#3:Improvingtheconnectivity ofthemonitoring

disciplines (e.g.ethics,risk,compliance, audit,etc.)tocreateastronger,moreconnectedandcost

efficientmonitoring system.

• Increasingexpectations,demandsandrisksforboards

• Higherpersonalexposureforindividualdirectors

• Decreasingrolesatisfactionduetoheavycompliance

• Significantlyhigherregulatorexpectationsandchallenges

• Lesspredictableandmoredamagingriskexposures

• Lessresponsetimetomakerisk-informeddecisions

• Dramaticallyhighercostsofcompliance

• NeedforhigherROIonmonitoringexpenditures

• Increasingboardandmanagementrequirements

MONITORING Verification

MANAGEMENT Execution

BOARD Oversight

TypicalGoverningChallenges

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©2016IntegratedGovernanceSolutions,LLCAllRightsReserved.

5ValuePillars&15ValueDriversIntegrativeGovernanceForCommunityBanks

Thecurrentrealityformanyoftoday’scommunitybanks(especially<$1billion):

BOARDYourboardwasdevelopedinamuchmorefavorabletimeforboardservice

STRATEGYYourstrategiesworkedbetterinthe“goodolddays”ofcommunity

banking

RISKYourriskprocessesweredesignedforamuchless

riskyandvolatileenvironment

REGULATORYYourapproachofwaitingfortheregulatorstotellyouwhattheyexpectdoesn’twork

anymore

TALENTYourtalentpoolislackingbecauseyoucan’tattract

enoughtechnology-orientedMillennials

FutureOptionsfortomorrow’ssuccessfulcommunitybanks:

STAYGoal:Thriveandgrowprofitably

SELLGoal:Maximizethesellingprice

1.Equipyourboardtonavigatesuccessfullyinanuncertainenvironment:

Ø TheCompetitiveLandscape

Ø TheBankSalesProcess

2.Alignyourbankaroundyourkeystrategiesforthefuture:

Ø GrowthandProfitability

Ø Short-TermValueMaximization

3.Manageriskbetter,andbeabletodemonstratethistoothers:

Ø KeyStakeholders

Ø PotentialBuyers

4.Increaseregulatorconfidenceandreducethepainofexaminations:

Ø BankStrategyandRiskManagement

Ø BankSaleObjectives

5.Attract,retain,andtrainthebestpossibletalentforyourbank:

Ø ToDriveLong-TermSuccess

Ø ToEnhanceSalesProspectsandResults

IntegrativeGovernance:

KeyValueDriversForYourBank

1.Yourboardoperatesatitshighesteffectiveness.

4.Yourboarddeliversvalueasatruestrategicasset.

7.Yourboardbetterunderstandsandexecutesitsriskoversightrole.

10.Yourregulatorshavehighconfidenceregardingthebank’sboardquality(oversight).

13.Yourboardcanattractandretainthebestandmostqualifieddirectors.

2.Yourboardisabletorelymoreonthebank’sriskprocessestofulfilltheirriskoversightrole.

5.Yourbankbetterunderstandsandmanagestheriskstoitsstrategy.

8.Yourbankcanmeasureanddemonstrateitsoverallriskmanagementeffectiveness.

11.Yourregulatorshavehighconfidenceregardingthebank’sriskmanagementquality(execution).

14.Yourbank’sstaffeffectivelyleveragesthelatesttechnologycapabilitiestoincreasestafftraining,effectiveness,andproductivity.

3.Yourboardisabletorelymoreonthebank’smonitoringdisciplinestofulfilltheircomplianceoversightrole.

6.Yourbankeffectivelynavigatesitsstrategiccomplianceissues/challenges.

9.Yourbankoptimizesthecostofcomplianceinlinewithyourriskexposurelevels.

12.Yourregulatorshavehighconfidenceregardingthebank’scompliancemonitoringquality(verification).

15.Yourbankcanattractandretainhigherqualitytalenttotypicallylessattractivecomplianceandmonitoringroles.

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WhereisYourOrganization?(OnTheGovernanceEffectivenessContinuum)

Insufficient Sufficient Excellent

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“Ourgovernanceneedssomeimprovementto

getwhereweneed/wanttobe.”

“Ourgovernanceisworkingforus,butcoulduserefinement

inafewareas.”

“Ourgovernanceishighlyeffectiveandmeetsallofourcurrentneeds.”

• Roadmap

• Execute

• Re-Assess

• Choose

• Refine

• Monitor

• Confirm

• Demonstrate

• Sustain

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©2016IntegratedGovernanceSolutions,LLCAllRightsReserved.

ContactInformation

BillBojan,Founder&CEOWilliam.bojan@integratedgovernance.com(612)804-0587

JoshJuergensen,CPA,PrincipalJoshua.juergensen@CLAconnect.com(612)397-3261

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