A False Dawn?

It is traditional at this time of year that Risk Audit shares its view on the corporate governance landscape in the financial services sector.

With the demise of daily Stop Press, I can assure readers that there is an awful lot of pent up frustration waiting to be unleashed on our readers. So here goes!

This year has been a tale of two halves.

2010 started with easy money. Vast amounts of cash pumped into the world’s economies to support failing banks. Cash that was used to support large speculative trade flows leading to significant profits earned (if one can use this word) by the planet’s major financial institutions. Capitalisation via the back door (although clearly not enough capitalisation as events later on in the year were to prove).

These positive figures allowed the banks to portray and sense of well being and fuel the suspicion that with the exception of a few major casualties all was well.

I suspect that this phenomenon heralded a false dawn.

All is not well in the world of corporate governance:-

• Transparency leaves a lot to be desired (witness the stress tests results of the Irish banks);
• Risk management, compliance and audit functions continue to be under resourced in terms of quality well trained staff;
• The willingness of these functions to challenge at the very top of the organisation continues to be lacking.

Generalisations, I know, but nevertheless concerning if I am right.

It is a great shame to waste a great crisis but that is exactly what the corporate governance sector is doing.

My sternest criticism is reserved for the regulatory community.

Initiatives to increase capital will come to nothing if regulators do not recognise that it’s about people. It is about ensuring that there is a global approach to dealing with the human dimension.

In this regard, strong political leadership is required pushing towards a recognition that financial services firms primarily exist to service society, not themselves, their shareholders or employees.

It is time that the financial services intermediation started to behave as a “profession”.

I am calling on all our readers to reflect on what a global profession could look like.

Please e-mail your comments to [email protected].

In the interim, all the staff at Risk Audit would like to wish our clients, candidates and delegates a restful Christmas and solid 2011.

Depending on feedback, Stop Press may be back next year.