Posts Tagged ‘reputational risk’
Competence and Risk….. Pigeons coming home to roost!
Tuesday, September 28th, 2010
The news that the Irish government is to wind up Allied Irish Bank, and in doing must consider the markets reaction and the impact on the Irish economy and government (and of course people), is perhaps an extreme example of the proverbial pigeon coming home to roost.
This one is very tatty indeed having been battered by forays, into the debt boom. If Anglo Irish Bank’s exposure to Quinn Insurance is indicative of a lack of effective risk management and associated management competence, it will be interesting to see what is in the balance sheet at Allied Irish.
The bubble made making money appear easy as the market surged upwards, everyone was a Super Hero – and the risk was managed by wonderful IT systems. But there is no substitute for competence – not just technical risk, but management (governance) competence. The ability to understand what staff are doing, (however arcane or black box it may appear), and when it is appropriate to challenge it, and to do so effectively are key competencies that are developed not innate. Business is still about people.
From the outside we cannot know the motivations, and positive actions that led AIB to build up such a toxic balance sheet. We may however seek to ensure that our own Super Heroes do not fall into the same trap and become homing pigeons.
Talk to us, in confidence and without obligation about helping your managers develop the competence and confidence to manage effectively. Solutions that engage, motivate and fit around, rather than disrupt the business.
Credit Crunch Fall Out – why competence matters
Wednesday, May 12th, 2010
What are we to make of the news that Anglo Irish Bank is looking for an insurer to take a 50% share in its indebted client Quinn? The reason is that the bank fears that without an insurance company leading the business, it will not recoup €2.8bn of loans made to the privately held company. The Quinn family has said simply that it will not be able to pay them back. AIB are looking for a company that does not yet have interests in the UK and Ireland – who are presumably willing to take the risk in order to buy into the market.
Quinn are in trouble with the Irish and British regulators because of their lack of capital, and the fact that they have allegedly been growing business by loss leader pricing. Their business methods have raised concern for some time with UK competitors allerting the FSA about unfair competition. Meanwhile the administrators are preparing a prospectus for the sale of the company.
What a heady mix of developing consequences of competence issues – bank and business. And a clear demonstration of the limits of oversight – both regulatory and risk management systems. This particular nightmare has added political colour as communities North and South of the UK/Irish border fight to maintain their jobs, and the Irish State must be groaning at the extent of the outstanding loan.
It begins to put the Goldman Sachs fraud allegations into perspective.
Next Steps?
Don’t risk your business, talk to us about managing talent and performance in high IQ staff and managers.
Intelligent, articulate, resourceful and angry….
Tuesday, March 31st, 2009
Tribunals are damaging enough in distraction and cost, however, the damage inflicted by Paul Moore, (Ex-Head of Group Regulatory Risk, HBOS) is in a different category. Moore’s evidence to the House of Commons Treasury Committee is interesting reading. Has the practice of ‘buying off’ employees with an accompanying confidentiality clause made organisations lazy? With the downturn making it hard for employees to move on, the financial and reputational risks of mishandling staff concerns are greater. With markets so challenging, why do organisations increase their costs and reduce their agility and customer focus by failing to nip potential problems in the bud?
? How functional is your performance management framework? Form heavy, impact light? Everyone assessed as mid to high?
? Do your team managers avoid ‘the soft stuff’?
Next steps
- Talk to us about how to improve delivery of the hard ‘soft’ stuff – practical performance management skills. And about improving the use and impact of your existing appraisal system. performance@theperformancepractice.co.uk
Further thoughts – You might also be interested in:
The text of Paul Moore’s memo to the committee – http://www.ft.com/cms/s/0/fca6a706-f81d-11dd-aae8-000077b07658.html