The risk of risk: Credit Suisse dismisses Chief Risk Officer et al. after $4.7 billion loss

Credit Suisse suffers huge losses, parts ways with Chief Risk Offficer and head of Investment Banking

After a double whammy of massive losses, Swiss lender Credit Suisse announced this week that its Chief Risk Officer and its head of Investment Banking will no longer be employed by the institution.

Credit Suisse recently announced $4.7 billion in losses as a result of loans to Archegos Capital Management, a U.S. firm that collapsed in late March. In the weeks prior to the Archegos failure, Credit Suisse suffered additional major losses when U.K. firm Greensill Capital declared insolvency

Credit Suisse has experienced various reputational and financial losses in recent years. According to Wall Street Journal reporting, the bank’s leaders have assured account holders that it would manage risk and avoid unexpected problems. The Journal turned to reputational-risk expert Nir Kossovsky for analysis. Kossovsky noted the ubiquitous conditions of “siloed knowledge, authority and accountability and not having a cross-organizational intelligence gathering and analysis around reputational risk.”

Frank Cummings, CEO of AML Partners, has in his career focused extensively on the challenges and solutions of horizontal governance and its role in risk and compliance

“The problems of siloed knowledge and the absence of horizontal governance are legion, and they hurt so many financial institutions and big businesses. Credit Suisse’s recent losses get a lot of attention, but lack of progress in horizontal Governance, Risk, and Compliance plague many big institutions,” Cummings said.

He said part of the solution is a commitment to horizontal Governance, Risk, and Compliance. And another big part of the solution is the technology available today. Cummings’ firm offers a RegTech platform that specializes in facilitating horizontal GRC. RegTech OneTM, the RegTech platform, allows auditors and risk managers to establish key risk indicators in all of their systems—key risk indicators that are then monitored and reported by RegTech OneTM.

“We see horizontal GRC as the key to successful Risk and Compliance, especially in complex institutions that have many branches, divisions, and services,” Cummings said. “When you leverage your Key Risk Indicators and when the right hand knows what the left hand is doing, decisions about risk have the benefit of much greater institutional transparency and shared accountability.”


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