I’m not sure where this is from (Iowa?) nor when it occurred, but it reminded me of these “waterskiing in a parking lot” chaps we profiled a few months back and I thought you would enjoy.
UPDATE: As the much-more-observant-than-I Brian R. points out in the comments below, this is from Europe.
(via Your Daily Gif Blog)
David Hood has been one of the many people noticing the huge uptick in love for risk management of late. And while doing so, he points out something salient about the banking sector.
See, one of the fallouts of the financial crisis has been a return to basic banking practices. Banks, fearing the world of complex securities and swaps that nearly brought the system to collapse, have been running towards “vanilla.” They needed a new influx of capital after finding out just how toxic their balance sheets were and saw checking and other traditional bank products as a safe haven to keep revenue coming in.
I was reminded of this by a recent article in BAI Banking Strategies titled, Online Account Opening Needed To Fuel Growth. The article rightly pointed out that many banks are going back to basics, building revenue by adding checking accounts and other more traditional products. However, the recommendation of the article is to embrace the online channel and open accounts for customers outside of a more constrained geographical footprint. In my opinion this has the potential to materially impact the risk presented to the financial institution.
It made me think about a couple of data points from my research. Namely that accounts opened online are 5x riskier than accounts opened through more traditional channels and that check fraud topped $1 billion dollars in 2008. The online channel represents a huge opportunity, but blindly chasing the revenue opportunity without regard to how an FI will manage the resulting risk can end badly. If the opinions of the risk managers at your institution haven’t been considered when evaluating strategic decisions such as pursuing online growth, it’s time to make room at the table and embrace them.
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Ironic that, in fleeing risk, the companies ran smack dab into risks of another flavor. Vanilla, it turns out, can be just as problematic.
Really, however, this should be obvious. We know risk is everywhere, and thinking that the downside of “safe” products doesn’t need to be analyzed is just as silly as the widespread, 2007 belief that algorithms had made the downside of complex securities disappear.
There is no way to make risk disappear.
There is only a way for it to be managed.
And as we can see here from this map of bank failures since 2008, that’s a lesson many had to learn the hard way. If more attention isn’t paid to the risks of the financial world — both the complex and the “safe” — expect this Wall Street Journal list of failures to grow.
Ryan Hanley has provided a tale of caution regarding employee benefits liability:
Let’s say you just hired a new employee and it’s their first day. First you walk them around the office introducing them to each employee and point out the “strategic” bathrooms. Then you sit them down and talk about how happy you are they’re joining the team and what your expectations are for their first few months of work. After the pep-talk your “Boss” obligations are over so you take the new employee to see the HR Manager who’s job it is to go through the nuts and bolts of working for your company.
What you don’t realize walking away from the HR Manager’s office is that he had been up till 300am the night before with a sick child and wanted nothing more than to zip through the New Hire presentation and get back to vegetating in front of his computer screen for the remainder of the day. So the HR Manager begins to skip through sections telling himself that he’ll explain Benefits to the new employee tomorrow. All that was necessary to explain was the building key-card and computer passwords. The HR Manager is a good employee, but today he just wanted the new employee out of his office. As fate would have it the next day was very busy with payroll issues and the HR Manager forgot to go talk to the new employee. And the new employee was so excited about her new job that she completely forgot that she did not sign up for the Benefit program.
Two months later the new employee is involved in a very severe car accident on the way to work. What do you think her reaction was when she woke up to hear she did not have Health Coverage?
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Can you say LAWSUIT!
As Ryan later notes, most companies have some employee benefits coverage within their general liability policies. But fewer know exactly what they would do if the situation described above came true.
The lesson, as always, is to understand your coverage.
I don’t watch Mad Men, but I hear it is the best show currently on TV from a lot of people I respect.
One of the most touted aspects of the show is that its period-piece realism lets viewers time travel to a bygone era of American business. A time when Madison Avenue ruled the advertising world and set the tone for consumer products. A time when the political correctness and general kid-gloves corporate culture of today didn’t exist. A time when white men strong-armed their way through the business world by any means necessary, giving little care to the rules, regulations and corporate guidelines they were technically supposed to obey — and running into few obstacles preventing them from behaving that way.
While those times and the people that lived in them are romanticized very well by Mad Men‘s creators, it’s probably a way of life best left in the past. Sure, the changes that have occurred since then have led to out-of-control litigation, and we now live in an over-sensitive culture where it can be nearly impossible to make tough decisions without upsetting some group of critics.
And, sure, legal risks, safety violations, environmental issues and dozens of other worries represent a whole host of risks that businesses rarely had to plan for in the past.
But — mostly — change has been progress.
New rules have helped move (at least a few) women to the top of the corporate ladder.
They have helped curtail discrimination. And they have ensured that business leaders (usually … OK, at least sometimes) follow the law of the land. Generally, the business world is a fairer and more equitable environment in which more accountability, respect and professionalism is demanded from all parties.
Plus, the risk management of today is much better — meaning that all you risk managers have jobs and influence that never would have existed in the days of Don Draper, the main character of Mad Men (played by Jon Hamm).
But what it Don Draper existed today?
Well, wouldn’t you know it, the blog Put This On has shed some light on that very question — by creating an image showing what Draper would look like if his image was sketched by the Wall Street Journal. And, rest assured, if this ad-selling, chain-smoking, womanizing, former used-car selling exec was around today, there would probably be a reason for him to pop up on the Journal‘s front page.
Quite often.