My Naivete in Believing in Risk Management
I was CEO of four businesses in my financial services career. Three with Citi and one a publicly traded thrift in Miami. From my training at Citi and from capable mentors along the way (Callen, Kravitz, and Harshfield) I learned that risk management was integral to my responsibilities as CEO. A risk management fail would be my failure, not a regulator failure. It was anathema to me that a regulator could come into my business and tell me that I had underperformed at risk management. So, it is amazing to me that obvious looming risks at SVB seemed to get short shrift from SVB management.
Risk management is the responsibility of the board and the CEO, not the regulators. I fear our current world of "too big to fail (moral hazard)" has enabled boards and managements to "safely" abdicate their accountability for institutional risk management failure. The institution that so ably taught me risk management principles (Citi) ended up a ward of the state due to risk management fails... go figure.
The NYT piece below posits that, forget the SVB bank management, even the regulators were sitting on their hands during a known looming crisis at SVB. When both management and regulators are overlooking obvious risks to the banking system we are in serious trouble.
Naive SDT (he actually believed he was responsible for risk management!)