Boards of financial institutions today operate in a state of sustained disruption — a permacrisis where shocks arrive in quick succession and familiar playbooks no longer suffice. In this environment, boards must not only fulfill their core oversight duties but also demonstrate the skills to proactively shape and challenge strategy.
Our 2025 CEO survey finds that from 2020 to 2024, 68% of financial services firm leaders have seen an increase in board involvement in both strategy and governance, while 45% have seen an increase in boards providing specialized expertise in areas such as audit and finance, cybersecurity, artificial intelligence, and geopolitics.
What do regulators expect from boards
Supervisors worldwide have taken note. They are redefining governance expectations to ensure boards are equipped to anticipate emerging risks — not just react to them. Across markets, regulators are converging on a common message: Board effectiveness ultimately depends on members who speak up, engage constructively, challenge assumptions, and analyze critically. Financial regulators expect boards to demonstrate a systematic, forward-looking approach to capability assessment that encompasses both technical expertise and broader strategic competencies. They increasingly recognize the relevance of behaviors, with regulators incorporating behavioral competencies as part of their fit and proper evaluation.
Taken together, these regulatory perspectives signal a converging standard for effective governance: one that goes beyond convening a group of eminent and erudite experts to focus on the substance of board performance .
Five ways boards can get ahead of disruption
Regulation alone cannot secure resilience. The most effective boards are using supervisory expectations as catalysts for deeper change: strengthening their skills, fostering behavioral excellence, and leveraging technology to enhance decision-making.
Select for behavioural intelligence, not just credentials
Firms looking to stay ahead of trends in governance must prioritize selecting board members based not solely on their credentials but also on their behavioral intelligence. Leading boards recognize the varying influence they have in appointing new members and emphasize traits such as constructive challenge, active listening, integrity, and learning agility. These qualities are as crucial as business acumen, especially during both stable and crisis situations. Boards that cultivate curiosity, openness, and mutual trust tend to perform better than those characterized by compliance or groupthink. Therefore, these essential attributes should be clearly specified in search criteria and rigorously assessed through nomination processes and 360° feedback.
Strengthen board governance through a culture of continuous learning
Boards that embrace a growth mindset are better equipped to adapt to changing circumstances. Continuous learning enables institutions to enhance their responsiveness and resilience. Many forward-looking organizations have transformed their annual training programs to include immersive learning experiences, such as crisis simulations and scenario-based workshops. Engaging external experts to discuss market trends and conducting "lessons learned" sessions encourages humility and adaptability among board members. Additionally, those with experience in crises can provide valuable coaching to executives facing serious situations for the first time, while board leaders must foster an environment that allows for questions and clarifications, particularly on complex topics.
Unlocking strategic transformation through board assessments
Leading institutions use board assessments strategically. They measure collective and individual performance against explicit behavioral and technical criteria, address gaps through coaching or succession planning, and commission periodic independent reviews to benchmark progress.
Formalize shared principles for stronger alignment
Some boards formalize shared behavioral codes or principles, establishing clear expectations regarding preparation, participation, transparency, and integrity among board and executive committee members. Such alignment helps to create a cohesive culture and provides a strong foundation for feedback and peer review. High-performing boards institutionalize these shared norms through 360° evaluations, ensuring collective values translate into consistent behaviors.
Using AI intelligently to enhance decision-making for boards
The strategic use of AI can significantly boost board effectiveness by improving the clarity and quality of information received. AI tools can assist management in refining board papers; however, it is crucial to maintain human accountability, as AI should augment, rather than replace, critical thinking and judgment. While it may be convenient for board members to use AI for summaries, this approach could overlook subtle nuances that experienced members would typically catch. Additionally, although AI’s ability to generate accurate meeting minutes is improving, it may miss important subtleties, and comprehensive recordings of discussions might inhibit open and candid deliberations.
Shifting from compliance to proactive risk management
Boards that institutionalize this approach will be better positioned to detect emerging threats, make higher-quality strategic choices, and sustain stakeholder trust over time. Ultimately, the institutions that thrive will be those whose boards balance rigor with agility and see governance not as compliance, but as leadership. Strengthening board effectiveness is not just a regulatory obligation; it is a strategic investment in trust, resilience, and long-term value creation.
