In light of recent “Black Holes” banks have been rigorously
running health checks on their operating and reporting 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 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.
People are only too ready to accept that spectacular profits are
being made without bothering to ask the question “how?”
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 the accuracy and integrity of the reporting. In such times it would
be well to remember the old truism 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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