An interesting article from the Financial Times. Excerpts:
So what are the lessons a decade on [from Barings' collapse]? When people talk about lessons from such events, they usually mean ways to stop them recurring.
No, the lesson I take from Barings is more human - about how to cope when disaster strikes, as it occasionally will. Most people who run banks, even if they acknowledge the theoretical possibility, do not think it will happen to them. They cannot believe they would make such juvenile errors in believing a rogue trader's lies.
The first instinct of some [Barings executives] was to deny they were to blame. Then there was what has become known in US corporate trials as the "30,000-feet defence" - that those at the top could not have been expected to know what was going on.
[But] when companies do well, not many executives go around arguing that they have nothing to do with the achievements of people at the bottom of the organisation. Taking responsibility when things go wrong comes with the territory.
[Also], it is easier on the psyche to admit to yourself that you messed up. Otherwise, you will be doomed to keep droning on about all the mitigating factors to sceptical listeners.
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Posted by: NMP | Jun 27, 2005 at 06:07 PM