Bank of Jamaica governor urges stronger board governance and risk-adjusted profitability as firms pursue growth

Bank of Jamaica Governor Richard Byles used remarks to the Caribbean CFO Conference on March 24 to urge companies to put boards at the centre of stronger corporate governance and risk management as they seek higher profits, warning that sustainable, risk-adjusted profitability is critical to resilience. Byles argued that traditional metrics such as growth and profitability should be complemented by an institution’s ability to withstand shocks and adapt to a volatile global environment. He identified key resilience pillars including strong financial buffers, effective risk management, cyber security, climate preparedness and sound governance, and cautioned that short-term earnings that exceed an institution’s risk capacity can erode stability over time. Boards and management were encouraged to assess performance using risk-adjusted returns, capital and liquidity adequacy, and alignment with stated risk appetite, supported by independent directors, relevant expertise, and effective risk, audit and governance committees chaired by independent members. He linked weak governance to loss of trust, higher funding costs, capital strain and potential regulatory intervention, and noted that interconnected Caribbean conglomerates can transmit weaknesses across markets. In discussing system-wide resilience, Byles pointed to Jamaica’s higher foreign reserves, lower national debt and a strengthened financial stability framework, and noted that legislation is being advanced to enable the resolution of failing financial institutions without recourse to public funds. He also said planning is underway to introduce a more robust “Twin Peaks” architecture for supervision of financial institutions.