Risk professionals, Leaders in banking, BFSI:

Not Too Big To Fail: Why Lehman Had to Go Bankrupt (Lehman’s resistance to risk management played a major role in its downfall, according to the firm’s former chief risk officer, Madelyn Antoncic)

As we look around the corner for the next financial crisis, these lessons from history should help us handle, if not prevent (‘Prevention is better than cure’ is now forgotten?)

  • Culture: Thankfully hubris was not the culture at Lehman.
  • Jail:Should the leaders go to jail? The author says. ‘no’. There was no legal issues, just lack of smart leadership. You can’t send leaders to jail for not being ‘smart’!
  • Centralized leadership: But leadership was the issue, especially when the leader was ‘all in one’! Chairman, Prez, CRO et al. The leader even had a stuffed animal in the room. Can it get more alpha-male than that?
  • Wrong innovations: The author rightly reminds us of the risk of shadow banking.

Will we ever learn from our past?

Master reminds us, intelligent people are those who learn from others’ mistakes. 

As Indian BFSI grapples with ILFS, to Yes Bank/Kotak Bank, stock market crash… these are points to ponder?

BFSI still depends on transactional training for ‘leadership’ development and promotion/incentive/stock options are still the tools to retain talent. Not Coaching!

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