In light of recent “Black Holes” banks have been rigorously running “health
checks” on their banking systems.
Events have underscored how vital it is that clearly defined operational
and reporting procedures are in place.
In many organisations the senior management 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 from my experience in trading environments it has not been
uncommon for totally unrealistic profit targets to be 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.
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!
Companies that are bucking the trend in these difficult times may well be
implementing a winning formula.
However history tells us that it is sometimes a prudent course of action
to look under a few stones – just in case.
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