Inspired by one of the few banks that has weathered the 2007-2009 credit crisis, the case illustrates the risk management in the world of commercial lending. The executive director Alastair Dawes must decide if the risk governance process is sufficient to discover the mega risks on the basis of reflections on the risk assessment and approval of a proposed credit of $ 1 billion. We encourage students to assess and consider the risks in the proposal prepared by the bank’s sales organization on behalf of a large gold mining company, and come to a decision (whether Wellfleet should accept). At the same time, students learn that risk decisions in the gray area, and in particular, the measurement of risk-adjusted performance rarely be automated. The risk governance requires executives to balance risk modeling and qualitative business judgment from a holistic point of view (instead of silos) risks.
Source: Harvard Business School
Release: July 13, 2009. Prod #: 110011-PDF-ENG
Risk management Wellfleet Bank: All that glitters is not gold box solution