Tag Archives: Risk

The top five unlearned lessons of the financial crisis

The above entitled article on Reuters was written by Bethany McLean, one of the authors of the book “The Smartest Guys In The Room”, which eventually became an Academy Award nominated documentary about the wiles of Enron.

The article makes for exceptional reading and is a must for those involved with the banking industry and especially those involved in risk, audit, finance and compliance. I highly recommend it to all. Please use the link below to access it.

The top five unlearned lessons of the financial crisis

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Are We On The Verge Of Another Financial Crisis?

Are we on the verge of another financial crisis?

It is a question well worth asking as the prices of stocks and property have been sky high by central bankers flooding the markets with cheap money.

What should risk professionals do?

The first question for risk managers, internal auditors and finance professionals is; how much of the cheap and plentiful liquidity provided by Quantitative Easing, or QE as it is known, has gone into inflating asset prices—stocks, bonds and housing?

The second question is: how far will asset prices fall when the Fed and the Bank of England start to “taper” or reduce their QE and how will that impact my institution? 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

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

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).

Human Risk 2: A Much Bigger Risk Than Most People Think

Human Risk 2:  A Much Bigger Issue Than Most People Think

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

It has been one week since the first article on human risk and the feedback has been more than interesting. Some believe that the management of human risk begins and ends with recruitment, retention and promotion, the traditional HR view of human risk. Others acknowledge that human risk goes beyond HR considerations but also believe that managing process risk is way more important than managing human risk.

This article will emphatically illustrate why both these assertions are wrong. 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