Risks - known and unknown, new or old.. bad stuff happens

Risks,.. they may be old or new, known or unknown, systemic or operational or financial, technology or enterprise. As life moves on and technology becomes all pervasive threats and risks take on new forms and mankind keeps learning to survive and live. 


However this post is not about mankind and I would like to stay within the limits of my knowledge and professional domain. 


New risks were exposed with "we-never-thought-this-could-happen events" like New York 9/11; Hurricane Katrina; Bhopal; Barings Bank; San Francisco Sys Admin Lockout; Mumbai 26/11; Icelandic Volcanic Ash; Swine and other types of Flu and so many such incidents.


People risks include many factors and a new risk that has come up is drunkenness. Getting high on alcohol while on the job is no doubt a risk and every manager has to call upon his/her best person-management skills to take care of the alcoholic colleague. Drunk at the office party and everyone knows you cannot hold your liquor and you have to hide yourself in a hole for the next week. 


However, technology brings news risks and if you can remember [1] your way to office, [2] your password, [3] how to start your system - then you can do what you like and blow hole in your company's finances. Like this gent ... 

City ban for £6m drunk rogue trader

30/06/2010

An alcoholic rogue trader who cost his oil firm £6million was yesterday fined £72,000 and banned from working in the City for five years.      Read more...

So here you go and add this new threat into your risk registers - TUI (Trading Under Influence) Make sure you keep a close watch on the boss and the traders, especially those who have had a good time over the weekend !

And then there are other risks too but we shall wait for them to be exposed. Bad stuff happens. move over DUI we have TUI in the workplace !









  

Societe Generale ... lies, lies and all lies

So Societe Generale lost 7.1 bn last week, then restated this to $ 5.x bn because 2.x bn was a loss from the sub-prime plague.

And it was a rogue trader who opened SG's purse but was it a rouge rat who cast the sub-prime spell on them ? Who has been blamed for this ?

Daniel Bouton, the bank Chairman, is on a panhandling trip to get $ 5.x bn and keeps his job, while his resignation is still on the desk. A moral resignation nevertheless which was honorably presented the moment the s%6t hit the ceiling.

Consider the lies which has been hogging the news :

First it was "Rogue trader defrauds the bank of $ 7.1 bn"

There was no defrauding the bank. This guy was doing his job, a and that too too independently. There was no one checking his work ! Cool........ give me the bank treasury and I will also play the stock exchange at will.
Hey what happened to the 7.1 bn - now it is only 5.1 bn ! the other 2 bn is actually the hit SG got from the sub-prime exposure and sorry the Chairman goofed up in his communication to the Prime Minister and the Central Bank and the public and shareholders at large.
Its okay this is just a couple of billion here or there ! So what if I just messed the European market a tad while squaring all holdings.

And he was "a junior trader, recently promoted from the back office. so he has intimate knowledge of the systems and easily circumvented controls"

Another white lie - he has been trading since 2005 (?) so that is pretty recent ! Three years on the trading desk and he contributed €1.5 bn to the bank kitty with his trading profits last year. Pretty cool performance for a junior trader and I am sure there was a lot of Champagne and partying at the end of the year when the numbers came in. Will you be surprised to find that the Chairman sent a case of Dom alongwith a card ?

The Chairman said that he did not know him...

OK we shall take it at face value. The Chairman is not supposed to know everyone in the bank. And considering how loose the controls at SG are, I am apt to believe that there are hundreds / thousands of traders betting the banks pants everyday and making a billion plus for the bank every year.

Now.......
The French government wants to protect this institution from takeover without realizing that it will be good for their health if this is allowed. At least the new owners will bring in a training program on 'Better Communication Skills for Chairmen"

I seem to be forgetting the information security and risk management aspect of this episode .... and will cover this in the next post.