CBA Corporate Governance Principles 3

Question 1

Which governance document typically defines the scope of authority delegated from the board to senior management?

Accepted Answer

Delegation of Authority Matrix

Answer

A Delegation of Authority Matrix formally specifies which decisions management can make independently versus those requiring board approval.

Question 2

Under U.S. banking regulations, the Federal Reserve's Regulation YY requires large bank holding companies to maintain which governance structure?

Accepted Answer

A Risk Committee of the board composed of independent members

Answer

Regulation YY mandates that covered bank holding companies establish a board-level Risk Committee with independent members.

Question 3

A bank identifies that two of its board directors serve on the board of a major competitor. This situation primarily raises concerns about:

Accepted Answer

Conflicts of interest and potential breach of fiduciary duty

Answer

Serving on competitor boards creates conflicts of interest, risks disclosure of confidential information, and may breach fiduciary duties.

Question 4

In corporate governance, the 'duty of loyalty' requires bank directors to:

Accepted Answer

Prioritize the interests of the bank over personal or third-party interests

Answer

The duty of loyalty requires directors to act in the best interests of the bank, avoiding self-dealing or conflicts of interest.

Question 5

Which of the following is a key function of a bank's Nominations and Governance Committee?

Accepted Answer

Identifying and recommending candidates for board membership

Answer

The Nominations and Governance Committee oversees board composition, succession planning, and governance practices.

(CBA) Certified Bank Auditor Practice Test