Gustavo Ballvé on December 21st, 2011
Corporate Governance, Corporate Strategy, Food for thought, Home, Mental models, Portfolio Management, Risk management

We continue to learn from the collapse of Jon Corzine’s MF Global, about which we’ve posted here (a bit more indirectly, also here and here. A recent article at NYT’s Dealbook highlights another lesson: ignore your chief risk or compliance officer at your own peril. While we agree that in this case it might have led to different and better decisions, such officers are still prone to all the talent, behavioral and incentives-driven traps and pitfalls. That said, the simple governance, hierarchical and process improvements the author suggests do help, and he also has the merit of recognizing that “Leadership has the right to challenge, disagree or even reject that advice.” The point is, one should make sure that risk avoidance is a cultural trait embedded into every person’s DNA from the moment of recruiting down to everyday positive reinforcement by management.

Remember: “Culture eats Strategy for breakfast”.

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