Overall Senior Management Assessment Criteria

Role of Senior ManagementPermanent link to this section

Senior management is responsible for directing and overseeing the effective management of the provincially regulated financial institution’s (“PRFI”) operations. Its key responsibilities include:

• Developing business objectives, strategies, plans, organization structure and controls, and policies, for board approval;
• Developing and promoting sound governance practices, culture, and ethics (in conjunction with the board);
• Developing and overseeing the risk management framework established by the board-approved Risk Appetite Statement;
• Executing and monitoring the achievement of board-approved business objectives, strategies, plans, and the effectiveness of organizational structure and controls; and
• Ensuring that the board is kept well informed.

Quality of Senior Management OversightPermanent link to this section

The following statements describe the rating categories for the assessment of senior management’s oversight of the PRFI’s activities and related risks, with due consideration to the PRFI’s safety and stability.

An overall rating of senior management considers both its characteristics and the effectiveness of its performance in executing its mandate in the context of the nature, scope, complexity, and risk profile of the PRFI. Characteristics and examples of performance indicators that guide supervisory judgement in determining an appropriate overall rating are set out below.

Strong	The mandate, organization structure, expertise, and practices of senior management meet or exceed what is considered necessary given the nature, scope, complexity, and risk profile of the PRFI. Senior management has consistently demonstrated highly effective performance. Senior management characteristics and performance are superior to generally accepted management practices.
Acceptable	The mandate, organization structure, expertise, and practices of senior management meet what is considered necessary, given the nature, scope, complexity, and risk profile of the PRFI. Senior management performance has been effective. Senior management characteristics and performance meet generally accepted management practices.
Needs Improvement	The mandate, organization structure, expertise, and practices of senior management generally meet what is considered necessary, given the nature, scope, complexity, and risk profile of the PRFI, but there are some significant areas that require improvement. Senior management performance has generally been effective, but there are some significant areas where effectiveness needs to be improved. The areas needing improvement are not serious enough to cause prudential concerns if addressed in a timely manner. Senior management characteristics and/or performance do not consistently meet generally accepted management practices.
Weak	The mandate, organization structure, expertise, and practices of senior management are not, in a material way, what is considered necessary, given the nature, scope, complexity, and risk profile of the PRFI. Senior management performance has demonstrated serious instances where effectiveness needs to be improved through immediate action. Senior management characteristics and/or performance often do not meet generally accepted management practices.

Senior Management CriteriaPermanent link to this section

The following statements describe the characteristics to be used in assessing the quality of senior management oversight of the PRFI’s activities and related risks with due consideration to the PRFI’s safety and stability. The application and weighting of the individual criteria will depend on the nature, scope, complexity, and risk profile of the PRFI and will be assessed collectively along with senior management performance in rating its overall effectiveness.

Essential Elements	Criteria
1. Mandate	1.1 Extent to which the board has delegated to the CEO responsibility for developing and implementing policies and practices for the effective management of the PRFI’s operations. This may include, but is not limited to: a) Strategic management; b) Risk management; c) Compliance management; d) Liquidity and funding management; e) Capital management; f) Internal control environment; and g) Ethical business conduct. 1.2 Adequacy of policies and practices to delegate responsibilities from the CEO to other members of senior management and to regularly review the appropriateness of the delegation. 1.3 Appropriateness of the mandates for senior management positions and the extent to which they clearly define lines of authority, responsibility, and accountability. 1.4 Extent to which these mandates are communicated across the PRFI. 1.5 Extent to which senior management ensures operational management and oversight functions have the appropriate authority, independence, and resources to carry out their mandates.
2. Organization Structure	2.1 Adequacy of policies and practices to regularly review senior management organization structure. 2.2 Appropriateness of senior management organization structure. 2.3 Extent to which oversight function heads have unrestricted access to senior and operational management and/or their committees.
3. Committees	3.1 Extent to which senior management committees are used to oversee the management of significant activities and related risks. 3.2 Extent to which senior management committee mandates are clearly defined and communicated across the PRFI.
4. Expertise	4.1 Adequacy of policies and practices to regularly review the range of qualifications, knowledge, skills, and experience required to fulfill senior management responsibilities. 4.2 Appropriateness of the range of qualifications, knowledge, skills, and experience available to fulfill senior management responsibilities. 4.3 Adequacy of policies and practices for the selection, appointment, and succession of senior management. 4.4 Extent to which management development programs are available to senior management.
5. Practices	5.1 Adequacy of policies and practices to establish business objectives, strategies, and plans, and to monitor the PRFI’s performance against them. 5.2 Adequacy of policies and practices to regularly review the PRFI’s liquidity, funding, and capital management policies, and to obtain assurances that approved policies are being adhered to. 5.3 Extent to which risk management policies and practices are: a) Enterprise-wide; b) Coordinated with strategic, capital, and liquidity management; c) Commensurate with the risk profile of the PRFI; d) Reviewed regularly for appropriateness; and e) Communicated to appropriate individuals across the PRFI. 5.4 Adequacy of processes, techniques, and criteria used to consistently identify, measure, monitor, control, and report significant risks, and to ensure that approved risk management policies and practices are adhered to. 5.5 Adequacy of policies and practices to ensure regular review of the organizational and procedural control environment. 5.6 Adequacy of policies and practices to ensure compliance with applicable laws, regulations, and guidelines. 5.7 Extent to which outsourcing programs promote prudent risk management practices and are aligned with long-term strategic objectives and PRFI’s risk appetite. 5.8 Extent to which human resource policies and practices give priority to attracting, developing, and retaining high caliber staff, and promoting good morale within the PRFI. 5.9 Extent to which compensation programs promote prudent risk taking and are aligned with the long-term strategic objectives of the PRFI. 5.10 Adequacy of policies and practices for communication and disclosure to stakeholders. 5.11 Extent to which management policies and practices promote sound governance and ethical business conduct.
6. Board Oversight	6.1 Extent to which board (or a board committee) approval is required for: a) The PRFI’s organization structure and changes thereto; b) Senior management organization structure and changes thereto; c) Senior management appointments and mandates; d) Business objectives, strategies, and plans; e) Liquidity, funding, and capital management policies; f) Significant outsourcing arrangements; g) Policies and practices for managing significant activities and related risk; h) Significant human resource policies and practices; and i) Communication and disclosure policies and practices. 6.2 Adequacy of policies and practices to promote transparent and timely disclosure to, and discussion with, the board (or its committees) on all significant issues. 6.3 Adequacy of policies and practices established by the board (or a board committee) to regularly review senior management’s performance and compensation.