Central Bank of Ireland board effectiveness review through D&I lens

Key takeaways for fund management companies

On 21 April 2026, the Central Bank of Ireland (CBI) published its feedback report on its thematic review of board effectiveness through the lens of diversity and inclusion (D&I) in the fund management company sector.

While the CBI has previously referenced D&I considerations, including board composition, gender balance and independent non‑executive director (INED) tenure, in earlier thematic work on fund management company effectiveness, this review is the first dedicated, standalone D&I focused assessment of board effectiveness in the sector. While the report applies to UCITS management companies and AIFMs, the CBI has been clear that the findings are relevant more broadly across other regulated firms.

The report reinforces the CBI’s long‑standing position that board effectiveness is a cornerstone of good governance, and that diversity and inclusion is a key component of board effectiveness.

The CBI expects fund management companies, and, more broadly, all regulated firms to:

• review and consider the findings of this report
• assess governance frameworks relating to board effectiveness through a D&I lens against both the findings and good practices outlined in the report
• take appropriate steps to address any gaps or weaknesses identified
• continually evaluate arrangements to ensure they remain fit for purpose.

Below, we examine the CBI’s key findings and good practices set out in the feedback report.

Overview

The review examined how fund management company boards operate and make decisions when assessed through a D&I lens. It covered a range of governance processes, including:

• board, senior management team (encompassing senior executives and designated persons) (SMT) and committee composition, including the role of the Organisational Effectiveness Director (OED)
• board evaluation processes
• strategic decision‑making processes
• succession planning
• broader D&I practices, such as policies, reporting and training.

The CBI has emphasised that diversity is not confined to any single characteristic and encompasses, among other factors, gender, age, ethnicity, educational and professional background. It notes that diversity of thought is critical to ensure a range of perspectives are considered and evaluated to help firms navigate their way through uncertainty. Inclusion, in turn, concerns whether those differences are valued and integrated into the firm’s processes, improving the quality of decision-making and strengthening governance and oversight.

While the CBI acknowledged examples of positive practices, its overall conclusion is that more work remains to be done to enhance board effectiveness through the lens of D&I within the fund management company sector. Issues were identified in governance processes relating to board effectiveness across all firms reviewed, with differing levels of understanding of D&I leading to varying degrees to which D&I was considered and embedded across governance processes.

Board, SMT and board committee composition

The CBI stresses that the key D&I considerations when assessing the composition and effectiveness of boards, board sub-committees and SMTs are diversity of thought and independence of mind. The report highlights that a more consistent and structured approach to embedding D&I, particularly at board and senior leadership level, can strengthen governance, support better decision-making and enhance overall board effectiveness.

The review found that firms demonstrated differing levels of understanding regarding the impact of D&I on governance.

Good practices observed included structured approaches to D&I evidenced through charter memberships, active board sponsorship and embedding D&I into governance structures. Board and SMT membership in firms generally reflected diverse professional and educational backgrounds, supporting broader perspectives and more informed decision-making.

Some firms also took proactive steps to address challenges in attracting diverse applicants at senior level, such as the use of tools to identify and reduce gender biased language, gender-neutral job descriptions and diverse interview panels at senior levels of the organisation, and ongoing engagement and challenge by human resources in terms of prospective candidates. In the CBI’s view such initiatives demonstrate a proactive and structured approach to improving diversity in senior roles.

However, the review highlighted a number of weaknesses across some of the firms reviewed that risk undermining board effectiveness:

• an overly narrow focus on observable diversity characteristics, particularly gender, without sufficient consideration of diversity of thought
• gender imbalances at board and board committee level and significant gender imbalances at SMT level
• some firms mistakenly equate D&I with corporate social responsibility initiatives, such as charitable or community engagement activities
• the absence of D&I targets or metrics
• limited evidence of local board D&I training, local reporting or board level sponsorship.

Independent non-executive directors

The findings highlight an inconsistent approach across firms regarding the emphasis placed on the role of INEDs and the value their independence of mind brings to effective governance.

In most firms reviewed, the INED held the role of board chair, which the CBI views as consistent with good practice. However, the review identified prolonged tenure, with some individuals having served for ten years or more. INED tenure featured in the CBI’s 2020 and 2022 thematic work on fund management company effectiveness, and the CBI reiterates that where an INED has been in place for a prolonged period it expects firms to:

• formally and comprehensively assess INED independence at least annually
• consider whether it remains appropriate to use the INED designation.

Maintaining a strong presence of truly independent directors, who demonstrate independence of mind and objective judgement, is seen as helping to ensure effective oversight and challenge. In the CBI’s view having a comprehensive process in place to assess and support the ongoing independence of INEDs further strengthens the overall governance framework.

Board evaluation

All firms reviewed conducted annual board evaluations, but they were found to be carried out to varying degrees of detail. The CBI views effective board evaluations as providing firms with a valuable opportunity to identify critical blind spots and incorporate diversity of thought, enabling the board to continuously evolve and adapt to the changing external environment.

The CBI identified examples of good practices, including the use of a board skills matrix where directors assessed themselves as "Very Experienced, Experienced or Limited Experience" and provided supporting rationale, promoting greater self-awareness of individual capabilities. In some cases, gender diversity was included within the board skills matrix, helping to embed D&I directly into the board evaluation process.

Areas for improvement include:

• reliance on self-assessment questionnaires, without broader assessments such as skills gap analysis and attendance reviews
• use of a simple affirmative/negative response format, which limited the depth and usefulness of insights gained
• D&I considerations, particularly around inclusivity, were often absent from evaluations.

Succession planning

While all firms had documented succession plans for their boards and SMTs, their quality varied widely.

Good practices included comprehensive succession plans that identified named successors, clear time horizons and detailed skills matrices. Others maintained separate documents for the succession plan and policy. Some firms had clearly documented, for each key personnel, their principal activities, responsibilities, and the skills, competencies and experience a successor would require. Some firms also indicated whether a successor was ‘ready now’ or required further developments, and noted which skills were missing from the board and SMT within their skills matrix. One firm maintained a named panel of potential successors for INED roles.

However, the following shortcomings were identified:

• succession planning policies that lacked clarity on how succession plans influenced board and executive appointments
• D&I considerations were largely absent, even in firms with diversity targets
• plans that were out of date following changes to named successors
• no version control or assigned responsibility for succession planning.

The report highlights that comprehensive succession plans can help reduce over-reliance on key individuals, assist the development of diverse leadership pipelines, and support long-term governance effectiveness.

Strategic decision-making

As part of the review, the CBI examined a strategic decision taken by each firm and, in some cases, observed board meetings directly. The findings again pointed to varying practices.

Good practices included the use of diverse project teams to advise the board, well documented decision‑making procedures and clear board minutes demonstrating challenge and discussion.

However, the review also identified areas requiring improvement in some firms:

• absence of standalone decision‑making policies and documentation of the strategic decision-making process
• key decisions being taken outside formal board forums without clear documented summaries or records
• minutes recording approvals without documenting the underlying discussion, challenge or voting process
• limited use of post‑decision reviews or “lessons learned” exercises.

The CBI notes that improving the governance around strategic decision-making, including thorough documentation, embedding formal review processes and the integration of D&I considerations can strengthen board effectiveness and overall governance quality.

Next steps

The boards of fund management companies should review the findings and good practices outlined in the report and assess their governance frameworks through a D&I lens. Where gaps or weaknesses are identified, firms should develop and implement actions to address them and continually evaluate their arrangements to ensure they remain fit for purpose. The CBI has indicated that where specific issues or concerns were identified during the review, these are being followed up directly with the individual firms concerned.

For more information, please contact any member of the ALG Asset Management & Investment Funds team.

Date published: 27 April 2026