Tag Archives: London Whale

Human Risk 3: Why Banks, Organisations Must Rethink Their Approach

This is the third in a series of articles on Human Risk. The first two can be found here and here.

It is commonly acknowledged that a primary cause of the last financial crisis was the poor culture and values within the banking industry—superstar bosses with big egos, greed and the failure to challenge management have all been identified as having played a major role. This assertion has been supported with reference to the likes of Fred Goodwin of RBS, Dick Fuld of Lehman Brothers and Stan O’Neal of Merrill Lynch who have all been named in Time magazine’s list of 25 People to Blame for the Financial Crisis.

If personal skills and attributes were indeed a major cause of the financial crisis then we must conclude that the failure of HR was as much to blame as the failure of traditional risk management. Continue reading

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JP Morgan Whale Trade Investigation

 It would seem that the authorities are taking a very close look ay JP Morgan’s $6.2 billionn derivative loss. The issue appears to be that pressure was placed on the trader to mismark the portfolio and the risk and pricing parameters adjusted accordingly. The folowing article from Bloomberg outlines the issues: London Whale Resurfaces in Potential US JP Morgan Case.

However, the article from the website Zero Hedge is a bit more detailed. It includes references to to the Congressional report on JP Morgan and why the bank may have been in breach of the Volcker rule.

Jonathan Ledwidge is the author of the book Clearing The Bull, The Financial Crisis And Why Banks Need A Human Transformation (iUniverse).