Mumbai, Nov. 12 -- Shri Swaminathan J, Deputy Governor, Reserve Bank of India, has highlighted regulatory gaps in governance in a speech. He noted that boards must own outcomes, not paperwork. A diverse and independent board keeps an organisation on track by overseeing compliance, risk, culture, and ethics. Directors must exercise their duty of care and duty of loyalty. He noted that in large conglomerates, risk does not stop at the boundaries of individual entities. Boards should see the whole, not just the parts. Two steps help. First, ring-fence critical entities so a local problem does not become a group crisis.

Swaminathan also talked about risk management and compliance. Internal audit tests the system independently. The Heads of a...