Protecting the Enterprise From Itself — Learning From History, Again

The following sections are included:Société Générale — BackgroundA French InstitutionPioneering Efforts and a History of Taking RisksThe Fight for Independence — Taking More RisksThe Fall of 2007Black Monday for Société Générale — Risks Are RealizedJerome Kerviel — Corporate Culprit“The Mine” vs. “Delta One” — Organizational ImplicationsGoing Big, Taking Bigger RisksThe Beginning of the EndThe Risk Becomes RealDamage Control — Too Little, Too LateRisk Revelations and RegulationIndustry Perspective — Unacceptable Operational RiskThe Basel Accords — Going Against Best PracticesKerviel's Side of the Story — It Involved ManyThe Fight for Independence, Part DeuxThe Recovery TrustThe French Restoration and Regulatory Power — Increased Regulatory RisksMore Resignations — More Risks, More InvolvedCase ReviewRisk Management LessonsDevelop a risk management culture that has multiple layers of safeguards in placeRecognize moral hazards and motivated agents take steps to minimize theseWork to overcome optimism bias in your teamLearn from previous risk lessons — remind your teamVerify resultsCase Questions