Recent
events have underscored how vital it is that Senior Management set clear
defined operational and reporting procedures.
In many
companies the Directors simply do not have the understanding of the mechanics or
the day to day activities of the business which they purport to run.
For example
I have worked in trading environments where totally unrealistic profit targets
have been passed from Board level to trading departments. No cognisance having
been given to the disproportionate risks which need to be taken to achieve
these targets. The clutch of looses reported by the Banks in proprietary
trading illustrates that this culture still exists today.
Some of the
most spectacular financial flame outs have followed a period of ostensibly
highly successful trading. In their desire to recognise these “profits” no
thought were given as to how they were being made. In such times it would be
well to take note of the old adage that is something looks to be too good it usually
is!
If your
company is bucking the trend in these difficult times it may well be that you
are implementing a winning formula.
However
history tells us that it is a worthwhile exercise to look under a few stones –
just in case.
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