What Constitutes A $7B Control Failure?

The media yesterday (Wall Street Journal, Associated Press, Economist, etc.) were all over 31-year-old Jérôme Kerviel, the trader at France’s Société Générale who has apparently confessed to fraudulent trades resulting in an estimated loss of roughly $7.2 billion.

In further coverage, we hear that the bank has apologized to share holders, filed legal claims against Kerviel, and promised the public that the incident does not suggest any larger issues with the company’s risk management. The Wall Street Journal however, follows up with a story questioning the effectiveness of regulatory oversight that can let something like this transpire despite Société Générale’s claims that controls were adequately tested and did not fail.

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Keeping up with global regulations

The Foreign Corrupt Practices Act (FCPA) has been seemingly more newsworthy than usual recently (even impacting Hollywood elite), with somewhat conflicting accounts of the US cracking down on bribery both here and abroad, and the rationale for the US to accept some level of bribery for the sake of broader national interests.

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Risky by association

The holiday season gave media and industry one more opportunity to discuss Mattel’s massive product recalls this year, and admittedly, I still find myself interested in the story. In this case, it was the World Business Council for Sustainable Development’s article calling out Mattel’s “Epiphany at Christmas”. 

The revelation: “If it's got your company's name on it, it's your problem.”

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Risk Management Lessons from the ‘Mortgage Meltdown’

Great article this morning in the Wall Street Journal about Goldman Sachs’ performance during the credit meltdown. The company has expectations of record income this year, while competitors are faltering left and right.

There are three important issues in this story — and in the sub-prime crisis in general — that all good risk management professionals know, and should keep in mind as often as possible.

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Play fair... or they'll come after your secrets

I’m not usually one for ‘this-could-happen-to-you’ stories, but I’m still having trouble getting over last month’s story about grocery giant Tesco having to turn over 11 million emails to the UK’s Competition Commission for their investigation into possible anti-competitive practices against its suppliers.

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