Tag Archives: Organisation

Why Customer Culture Is Far More Important Than Risk Culture

This is a follow up to an earlier series of articles on risk culture in banks the last of which can be accessed here.

The best institutions and organisations are those which define themselves in terms of how they have they can best serve their customers (and the wider community) and not how they intend to manage risks.

This is a lesson that bankers, regulators and governments all need to learn—the future success of the banking industry depends not on more rules and regulations but how well banks transform their customer culture. As we shall see, that has very little to do with how they measure risk. Continue reading

The Question That All Bankers Should Be Asking: Why Are We Here?

The following article was originally published in the October edition of The Journal of Business Compliance.

INTRO: Jonathan Ledwidge is an author and risk professional with more than 20 years experience in investment banking and has strong views and undeniably good questions. In this opinion article, the first under the Speakers Corner column of the Journal, he asks questions of everyone in the corporate world, not merely bankers, but industrialists, regulators and all those associated with the formation of governance frameworks, the promotion of meaningful corporate culture and their implementation. He considers the many pitfalls into which a generation of business and political leaders have fallen and the consequences these have had on regulation and internal control practices. The scandals that have come to light within the banking sector have overshadowed scandals of corruption and misselling in other industries that just as crucially require answers and reflections of the existential question: Why are we here?

“Tell me again Maximus, why are we here?” Continue reading

Human Risk 4: Steve Ballmer, The Decline Of Microsoft

This is the fourth in a series of articles on Human Risk. The first three can be found here, here and here.

Microsoft CEO Steve Ballmer, who took over from Bill Gates in 2000, recently announced that he will be resigning within 12 months. The fact that Microsoft’s shares jumped almost 8% on the news is testament to the widely held belief that Ballmer is primarily responsible for the decline of Microsoft relative to its much nimbler rivals such as Google and Apple.

By some estimates as much as $24 billion was added to the market value of Microsoft on Ballmer’s announcement. This is proof, if ever any was needed, that culture and risk are twin sides of the same coin. The only question is; what if any, were the specific cultural issues that caused one of the most important organisations in modern history to decline in value and competitiveness? Continue reading

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

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

What Is Your Organisation Doing About Human Risks?

This is the first is a series of articles on human risk.

What is human risk? Do you believe that the management of human risk is important? How important is human risk to your particular organisation? Do you believe that your organisation is doing enough to manage human risk? Is the management of human risk the responsibility of HR or is it more important than that? Continue reading

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