Monthly Archives: June 2013

Bank Risk Culture: Now For Something Completely Different

The following is the fourth in a series of articles on bank risk culture. The previous articles can be accessed here or by clicking the HOME tab on the blog.

Thus far in this series on bank risk culture we are beginning to understand that there is really no such thing as a separate bank or organisational risk culture and that cultural change cannot be invoked by merely adding more rules and regulations. Continue reading

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Why Focusing On Bank Risk Culture Is Meaningless

The following is the third in a series of articles on bank risk culture. The previous articles can be accessed on the blog here.

In the previous articles we argued that it is futile if not impossible to separate the risk culture of an institution from the other aspects of culture within it. This article further develops this assertion by looking at some very specific examples of how banks got into trouble during the subprime crisis and why, in each case, only focusing on risk culture would have been totally inadequate.

In a January 2009, The Economist wrote an article on Citigroup entitled “A House Built on Sandy”, a less than veiled reference to the bank’s former CEO Sandy Weill and its troubles during the financial crisis. The article did not pull any punches and here are just a few of the statements it made: Continue reading

Important Lessons In Understanding The Risk Culture In Banks

The following is the second in a series of articles on bank risk culture. The previous article can be accessed here.

The subject of the risk culture in banks is all the rage these days and experts and academics of every hue and stripe have opined on the subject and given their views. A 2012 report by Ernst & Young entitled; Progress in financial services risk management: A survey of major financial institutions, states the following:

“Culture is a critical area of management focus, particularly for firms most severely impacted by the 2009 crisis. Strengthening risk roles and responsibilities, enhancing communication and training, and reinforcing accountability were the key initiatives reported to strengthen risk culture. Making risk “everyone’s business” throughout the organization is an ongoing effort.” Continue reading

Banks, Governments And Regulators Must Define Culture Before They Can Change It

Changing the culture of banks is a difficult task. However, given that the parties involved in making that change; banks, governments and regulators, are yet to define what it is they are trying to change, it makes their task not only difficult but practically impossible. Continue reading