May 2024

Chris Clark conducts interviews with leading corporate directors and subject matter experts for Stuart Levine & Associates, a global consulting and leadership development company. The Planet Governance™ interview series features the views of corporate directors, chief executives, and governance experts on timely issues from succession planning to risk management to stakeholder activism.

This well-respected corporate director values networking, collaboration, team engagement, and open communication as key factors to business success…

Ursuline Foley is an accomplished independent non-executive director, Qualified Risk Director®, former successful global c-suite executive in technology & business operations, thought leader & advisor, with over 35 years in Financial Services. Ms. Foley serves on public, private, advisory, and not-for-profit boards providing oversight and advice in business strategy, innovation, technology, digital transformation, risk management, operations, data & privacy, and cybersecurity.

Ms. Foley is a member of the Provident Financial Services & Provident Bank board (NYSE: “PFS”) and is a member of the Risk & Technology committees. Additionally, she serves on Greenlight Re, a specialty Property and Casualty global reinsurer (NASDAQ: “GLRE”), serving the audit committee and chairing the compensation committee.

Ursuline Foley

Ursuline Foley

Chris: For years, governance experts have said, “if you’re a new director joining a board, the best place for you to learn the company is to start on the audit committee.” Do you still think that advice holds true?

Ursuline: First Chris, let me just thank you for the opportunity to chat with you today. Yes, I believe the audit committee provides a comprehensive perspective on a company for a new director. In fact, I would recommend that all new directors should have to spend a year or two on the audit committee of that company to start out. It’s a wonderful committee for a new director to get a holistic view of the company quickly because a significant aspect of the business requires Audit Committee oversight such as all financials and their controls, external and internal audits, regulatory filings and supervisory examinations, operational sustainability processes and policies, strategic plans, and budgets.  For companies that do not have separate risk or technology committees, then the audit committee is also responsible for providing oversight on all aspects of risk (from framework, appetite, profiles, and scorecard, to policies) including cyber risk.

The Audit Committee is the best place to really get a good perspective for how the business flows and whether the company is financially healthy, aligned to its business strategy, meeting its business plan, performance metrics and compliance with its regulators.

Chris let me also suggest that another approach that helps onboard a new director is to have a well-structured director on-boarding orientation process.  This would include providing the new director with the relevant company documentation such as strategy documentation, current business plans, and organizational charts. Part of this process would also include meeting individually with the other directors on the board and also with key members of management. A good on-boarding process helps the new director to quickly get familiar with the company and helps to get relationships with the board and management off to a great start.  Also, a suggestion — the new director then meets with the other directors as needed going forward to gain a true sense of the existing board topics and dynamics.

When you look at the other two committees, the Nominating and Governance Committee, and the Compensation Committee, they’re somewhat less focused on the actual business of the company. Those two committees, which are also very important to the success of the board, have quite a different focus. It’s the Audit Committee that validates whether the company is doing what it’s saying it’s doing. In my view, the rubber hits the road in the Audit Committee.

Chris: Urs, you said something very smart. If that board has a strong, formal, structured orientation program…

Ursuline: You want to onboard a director most positively and effectively as possible since you want the new director to quickly feel part of the board and to ultimately add value. Not every director is familiar with the business of that company. When I joined my bank board, I had no experience in banking as most of my career was spent in the Re/Insurance industry.  The liabilities and the assets on the balance sheet in banking are different than the liabilities and the assets on the balance sheet for a reinsurance company since the businesses are different. This took me a few months to fully comprehend but by being able to discuss this informally with our CFO and with a few of my fellow board colleagues, I was quickly able to learn and adapt to the change.

It is important to get new directors quickly up to speed on the business of the company and to get them conversant on how success is measured in that company. That’s really why I go back to saying that the best place for that really is the Audit Committee.

Chris: The proliferation of artificial intelligence is affecting everyone, but in particular, banking. How do you think corporate boards are coping with artificial intelligence?

Ursuline: Artificial intelligence (AI) is something that every company, no matter what the industry or size, must prioritize because AI is going to provide continuous value and change over the long-term. I think the value that AI provides will incrementally increase over time because the technology will get better, the data that it’s applied to will get better, and employee understanding of its capabilities, strengths, and weaknesses will also improve.

Most boards are currently trying to educate themselves on AI and trying to understand, “What do we mean by generative AI? Where do we think the opportunities are for our company?” Right now, there isn’t a playbook for providing oversight on AI in a board – the technology is still so new. The most important thing for boards is to have some educational sessions, along with discussions with management so that the board can gain an understanding of the possibilities of leveraging AI for that company.

Boards should encourage the senior management team to leverage AI, but to not be the leader in it, per se, but to be a strong follower and to go cautiously. This way they learn as they go, and they provide business value incrementally. The learnings should include how the culture is going to embrace AI, over time, what education is needed and ideally a high-level plan should be created outlining where AI could be leveraged to provide business value. As the management team explore and use AI, its then the duty of the board to provide oversight on the AI plan and usage, to ensure that appropriate governance processes are established and that they are not putting the business at risk.

Chris: You have a unique perch in the director world. You’re on a compensation committee, a risk and technology committee, and an audit committee.

Ursuline: Yes Chris, I am very fortunate to have the opportunity to participate in these very different board committees with each having a different focus on providing board and company oversight.

Chris: You have a unique perch in the director world. You’re on a Compensation Committee, a Risk & Technology Committee, and an Audit Committee.

Ursuline: Yes Chris, I am very fortunate to have the opportunity to participate in these very different board committees with each having a different focus on providing board and company oversight.

Chris: I’m guessing that looking at risk holistically is the real challenge.

Ursuline: I believe that enterprise risk management work, overseen by the risk committee or audit committee, is indeed the most challenging and the most interesting. It requires directors and management to think very holistically about potential business risks both external, internal, and emerging that could impact the company (negatively or positively) and its ability to achieve its business strategy. Many financial services companies (and also other industries) have embedded risk management philosophies into their organizations and institutionalize them via various risk frameworks. They identify the different risks relevant to that business, both internally, externally, and emerging risks, and they also map out their risk appetites for these risks and develop frequent scorecards measuring and monitoring risks. While these methodologies are extremely helpful in providing a discipline to monitor and oversee risk management at the board level regularly, even so, directors still need to challenge themselves to think outside the box and ask curious questions of management to assess their comprehensiveness, ability to respond to risks and assess overall corporate risk culture. The constant review (and updating) of risk dashboards is important for business strategy success and should be a priority for companies, especially in these uncertain and changing times.

Chris, also worth mentioning is that the most important aspect of risk management is about having a well-defined response plan to different risks should they occur. It might not be a perfect plan for every risk, but you at least have thought through and developed a written plan on how a company responds and recovers in the case of a risk event occurring. It’s important for management to have these plans ready so that they can rely on them when they are under the stress of addressing the risk.

There will be times that even with the best risk and response planning, some risk events can occur that can surprise companies, as was the case with COVID, which was a black swan event. None of us thought the U.S. would get impacted by COVID. We always thought, “Oh, surely we have protection.” Well, it turned out that we didn’t. However, many companies that had comprehensive and well- tested business continuity and sustainability plans were able to leverage those plans during COVID by empowering employees to work from home and depending on their products, some companies were even able to pivot to service customers remotely.

Chris: Moving on, do you have a red flag that identifies an underperforming director?

Ursuline: Chris, I don’t think that I’m the best one to answer this question because all my director colleagues are highly engaged.

I consider myself to be very fortunate to work with very experienced and highly engaged directors which provides interesting and comprehensive board discussions. All my director colleagues are very focused on ensuring the success of the company, the shareholders, the employees, the community, and customers and therefore, they’re all very caring of the company and engaged. I hear interesting stories from other directors where they are serving on boards that seem somewhat dysfunctional, which I am sure provides interesting challenges for directors.

Chris: Well, Urs, you answered it without answering it. Your “flag” is engagement… and perhaps not leaning into continuous learning.

Ursuline: Chris let me also add that when I first started my board experience five years ago, directors that were already seasoned in their board journey said to me, “Well, it takes about 250 hours a year per board for board service.” That’s the reading materials and attending the board meetings. I have to say that any director that’s only doing 250 hours a year in these times is only doing the minimum.

Chris it’s not just about engaging at the board meetings, it’s about making the impromptu calls to the other directors when something is on your mind like, “Hey, what did you think about that when they discussed this topic at the board meeting?” Or “Hey, I’m reading this in the press, do you think our company is thinking enough about that topic?”  Directors also have to be continuously learning to remain relevant and to stay abreast of the industry and the ever-changing opportunities and challenges that your industry and company is faced with.

For directors that are serving on four or five public boards… I wonder how they are providing value to each and doing every one of them enough justice.

I say to directors that are starting out on this journey, “Think carefully about the type of company and the type of industry that’s approaching you. First of all, are you passionate about it? Will you be able to sleep at night knowing the type of business that they’re in? Can you really add value to that board?” Then the other thing is, even if it’s an industry that you feel that you can add value to and that you feel you will enjoy, is the company in good condition? If they’re not in good condition, have they recognized they’re not in good condition and that’s why they want additional directors or they want to transition out directors. The bottom-line is to understand fully what you are getting involved with and committing to, as board work is a very important commitment for a company and its shareholders.

Chris: Is there anything in your journey that surprised you about your board service?

Ursuline: Chris, I wasn’t overly surprised, but I do want to highlight one point as I think it’s something that non-directors may not be aware of. When accomplished C-suite executives are thinking about pivoting their career to directorships, they’re enchanted by the fact that they will have more flexibility with their schedule – which is true, and I enjoy that. However, what they don’t appreciate is the fact that the pay structure is quite different.

What I share with new prospective directors is, “Make sure you can afford this endeavor. This is a major career change. Yes, you will have a better quality of life. However, if you have financial requirements and constraints already, you must understand that a board career is not going to provide health benefits or an annual bonus”. It is a different type of career that is extremely interesting with lots of flexibility and diversity of work, however, it does come with a different type of pay structure.

Chris: Urs, thank you for all of your insights.

Ms. Foley is a member of the Provident Financial Services & Provident Bank board (NYSE: “PFS”) and is a member of the Risk & Technology committees. Additionally, she serves on Greenlight Re, a specialty Property and Casualty global reinsurer (NASDAQ: “GLRE”), serving the audit committee & chairs the compensation committee.

Chris Clark joined Stuart Levine & Associates as a senior consultant after a distinguished career at the National Association of Corporate Directors (“NACD”).

He is known for his prominent role in the creation of NACD’s “The Power of Difference”, “The Leading Minds of Compensation” and “The Leading Minds of Governance” conference series, “The Directorship 100”, and NACD Private Company Directorship.

Chris’ expertise includes corporate governance (with board assessments and committee charter reviews as cornerstones), conference management, and digital content creation.