23 August 2017
Stanley Epstein
Stanley Epstein

Stanley Epstein

Stanley Epstein - Citadel Advantage Ltd

44Posts 178,741Views 52Comments

This bank could be dangerous to your financial health

31 July 2009  |  2919 views  |  0

I have been reading of late in the financial press and various blogs how bank Boards are, all of a sudden embracing a culture of risk management. Suddenly they are into governance issues too. What rot! Where have the banks and their Boards of Directors been these past ten years or so? And at the same time too, where have the regulators been?

Basle II, as the basic risk management text for the world's financial industry has been by and large ignored by the people it was intended for - and that goes for both the banks and the regulators. The questions of governance and responsibility are pretty well documented throughout the Accord. Basle II was intended to be implemented in totality not as a "data mining exercise" which it ended up being, to the immense satisfaction and profit of the technology vendors.  

Now, all of a sudden we have these pathetic scenes of bank Boards running around bleating all the catchwords; "risk appetite", "transparency", "governance", "employee awareness", "risk functions" and "chief risk officers". And no doubt the regulators seeing all this activity will let out satisfied grunts and return to their post luncheon slumbers.

Looks to me very much like the same flock of sheep all over again.

Banks have already had one chance to do what they had to when it comes to risk and risk management. They messed it up - but as a reward they were all saved from the fire while the rest of the economic population lost out (and will continue to pay for this for years to come).  

Banks now have a second chance to get this done right. It is time for bank Boards to become pro-actively committed to risk management in all its facets, credit risk, liquidity risk and operational risk. It is time too for Regulators to focus more sharply on risk governance in their analysis of the health of banks. And as at least one commentator has suggested it is time that investors, shareholders and customers start to differentiate banks on the basis of how they manage their risks and their business.

Perhaps what we need is a published "Risk Rating" for all banks. How about all financial advertisement material carrying this rating much as the "Health Warning" carried on cigarette packs. Maybe then we would get bank Boards to stop playing lip service to what they should be doing all these years and get down to doing it.

Until then, I look at all this activity and all the pronouncements and don't believe a word of it.  

TagsRisk & regulation

Comments: (0)

Comment on this story (membership required)

Latest posts from Stanley

Getting digital banking right

22 August 2016  |  6875 views  |  0 comments | recomends Recommends 2 TagsMobile & onlineGroupInnovation in Financial Services

Is the fintech industry killing mobile payments?

16 August 2016  |  7931 views  |  2 comments | recomends Recommends 2 TagsMobile & onlineInnovationGroupInnovation in Financial Services

Reflections on the fintech revolution

14 August 2015  |  6201 views  |  0 comments | recomends Recommends 0 TagsInnovationGroupInnovation in Financial Services

Why I am worried about the future of mobile payments

02 March 2015  |  4023 views  |  3 comments | recomends Recommends 0 TagsMobile & onlinePaymentsGroupInnovation in Financial Services

Understanding Digital Banking

12 January 2015  |  13053 views  |  0 comments | recomends Recommends 1 TagsMobile & onlineInnovationGroupInnovation in Financial Services

Stanley's profile

job title Director
location Modiin
member since 2008
Summary profile See full profile »
Stanley is a Director and co-founder of Citadel Advantage Ltd., an international consultancy to the financial services industry that provides specialist services and training in the areas of operation...

Stanley's expertise

Member since 2006
44 posts52 comments
What Stanley reads

Who's commenting on Stanley's posts