Tag Archives: Leadership

The Role of HR: To Out The Megalomaniacs?

Risk Culture: Accountants, Auditors Should Be Leaders Not Police Officers

 This article was originally written for and included in the ACCA Quarterly Newsletter for Financial Services, AB.Direct.

What is the risk culture of an institution? When assessing the economic and competitive sustainability of an organisation, is it good enough to focus solely on the risk culture? Continue reading

Banks Desperately Need A Crisis Management Plan

Can you imagine a major industry which suffers a near death experience, angers its entire customer base—wholesale and retail, domestic and international—and yet refuses to publicly apologise and adopt a plan of action that commits the industry to not repeating the mistakes of the past. That is where the banking industry is at right now.

This lack of decisive action on the part of the industry’s leadership will do lasting damage to not only the industry but also to its as yet unforgiving customers and the global economy. Part of the problem is that the industry does not appear to even realise that it is in a crisis—one which has been brought about by a complete loss of public faith in its activities. That is a tragedy. Continue reading

Only Bankers Can Create Great Banks Not Governments Or Regulators

It is impossible for any industry to survive if it relies on the actions of governments and regulators to watch over it in order to make sure that it does not blow itself apart. Yet, this is the precise position in which the banking industry now finds itself. Continue reading

The Commitment That Banks Must Make For A Better Future

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

A total meltdown in any industry requires nothing less than a total rethink of the way forward. However, rather than finding themselves engaged in a total rethink of the how and why they must transform their business, banks have been engaged in responding to more legislation and regulation as well as improving their governance and internal controls.

The problem for banks is that neither governments nor regulators can create a better future with great institutions—only bankers themselves can. Continue reading

Banks Have Arrived At A Gazpacho Moment

A few years ago, I went to a reunion of my Cass Business School MBA class. Immediately on seeing me, one of my former classmates started laughing. I was, of course, puzzled and asked him what was so funny. He apologized for his outburst but confessed that, in the past several years, he had, on several different occasions, taken great pleasure in telling some of his friends a joke about me.

I will share that joke with you. Continue reading

Bank Risk Culture: An Alternative View On The Causes Of The Last Financial Crisis

The following is the sixth 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.

A total meltdown in any system requires nothing less than a total rethink of the way forward.

Legislators and regulators have blamed the subprime financial crisis on a whole host of issues including derivatives, proprietary trading, deregulation, the collapse of Glass Steagall and the integration of retail and investment banking, as well as the overall failure of risk management and corporate governance. What we have learned so far in this series of articles is that the actual reasons are somewhat different as they relate to the overall culture of banking. Continue reading

Bank Risk Culture: Why Leadership At The Top Is Single Biggest Source Of Risk

The following is the fifth 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.

No discussion of risk and culture is complete without examining the role of leadership in defining both. This week’s article will demonstrate that poor leadership is the single biggest source of risk to an institution. It is also a source of risk which no amount of risk management or focus on risk culture can overcome. Continue reading

9 Point Plan For Transforming The Banking Industry

The banking industry needs to be transformed in order to save it from itself. Despite the protestations of governments, regulators, public and the media that change can only come from within (spare us another thousand useless regulations). Here is how it should be done.

Another banking scandal, another inquiry, another band-aid and so we will continue until the next scandal, another inquiry and another band-aid. It is a depressingly familiar sequence of events.

The problem is that while governments, politicians and regulators are beginning to realize that transforming banks is about values and culture they still believe that that transformation can be legislated and/or regulated.

This blog has stated several times that transforming the industry can only be accomplished from within and that it must recognize the human issues and behaviors involved. The plan below consists of a series of assertions, 9 in total, as well as the rationale for these assertions.

The proposed transformation is comprehensive in that it covers every aspect of the human ecosystem within which banks operate; managers, employees, customers, suppliers and the wider community, the environment within which they operate and the behaviors which motivate them.

This is why the transformation is described as a human transformation and the transformed entity is known as The Human Asset Bank. This is what banks must do and preferably sooner rather than later.

The Human Asset Bank

Continue reading

Clearing The Bull: JP Morgan And Derivatives Derangement Syndrome (DDS) Part II

In the first article we placed the JP Morgan derivatives loss in context, noting that governments are a far greater danger to our financial health than banks. This article focuses on why more legislation, more regulation, more governance and more controls will not solve the problem.

Contrary to what everyone would have us believe the failures at JP Morgan were not about legislation, regulation governance and controls—history shows that these only work until the next cock-up. They are about the mission and values of the organization, and thus the type of culture within which it operates.

Continue reading