This is an excerpt of Steinecke Maciura LeBlanc’s “Governance for Regulators” handbook. To view additional sections of the handbook, click here.
b. Context: What Does a Board Do?
There are many ways to describe the role of the Board of a regulator. One description is that the Board of a regulator primarily ensures that the organization appropriately manages the risk of harm to the public from the actions or omissions of practitioners. A secondary role is to ensure that the organization appropriately manages risk of harm to itself.
The key word here is “ensures”. That word implies that the Board does not, itself, do the protecting. Rather, the Board is overseeing the regulator’s activities so that harm is minimized. The word “ensures” also implies that the Board is ultimately responsible for the success or failure of the regulator in achieving its risk management goals. Another key phrase is “appropriately manages the risk of harm”. This phrase implies that the regulator does not eliminate risk (which would be impossible), but is wise and prudent in reasonably addressing the important risks.
To perform this function, the Board typically does three things:
- Identifies and sets the priorities of the regulator;
- Develops the high-level policies of the regulator; and
- Oversees the performance of the regulator in achieving the goals set out in the first two activities.
We will discuss the function of the Board in more detail later when reviewing the role of the Board.
Quiz on What the Board Does
Which of the following should the Board not do? There may be more than one correct answer.
- Consult the profession and the public on policy proposals being considered by the Board.
- Review individual complaints decisions.
- Conduct staff performance reviews.
- Review the quarterly financial statements of the organization.
Consulting the profession and the public on pending policy proposals is an appropriate way for the Board to perform its policy making role. While the Board will rarely do the consulting itself, it would direct a process for consultation (e.g., circulating the proposals for comment). Reviewing individual complaints decisions is a poor way of overseeing the regulator’s activities. This amounts to second-guessing by people who are less expert on complaints issues and less informed of the details of the case than the people who made the original decisions. Oversight is best done by reviewing patterns and trends. Conducting staff performance reviews is another poor way to oversee the regulator. Board members are not familiar with the day-to-day performance of additional staff and do not have the expertise in human resources management that senior staff would possess. Regulatory Boards invariably limit their performance review to that of the CEO. Reviewing the quarterly financial statements of the organization is an effective oversight strategy. It allows the Board to see patterns in the financial performance of the organization so that major course corrections can be initiated if required before the year-end.