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Bank Management

S/F/86. The management of risk by senior managers in financial institutions and the Collapse of Barings

WORDS:

1900

DATE:

2006

PRICE:

19.99 GBP

The main objective of a bank, in order to be profitable is to manage risk effectively. The importance of management is to control and monitor the risks associated with the business. Banks have a responsibility to protect shareholder funds and those of their depositors. Recent losses and bank failures demonstrate that greater transparency is required over their risk profile. The lack of understanding of risk from management and poor analytical methods for risk, results in losses, like the Barings fiasco. It is important that procedures are in place for identifying, measuring and managing those risks. Barings bank failure is a prime example of the resultant effects of managers failing to monitor and organise trading activities. A fundamental principle in the banking industry is that one individual cannot have control of the front and back office. In 1992 Leeson became responsible for the back office and also to take client orders in Baring Futures Singapore (BFS)

KEYWORDS: Barings, Risk, Management control,