Rogue Trader Essay

Words: 2481
Pages: 10

eBARING BANKS

THE MOST SHOCKING ALARM BELL ABOUT FRAUDULENT

Introduction
On February 26, 1995, the oldest British Bank’s declared bankruptcy due to fraud caused the warning bells for many other organizations about the level of danger fraud can cause. Nick Lesson, a guy who comes from a background of the working class, had been working for Royal Bank Coutts, Morgan Stanley for a couple of years until he finally joined the Barings. He was assigned a job in Barings (Jakarta) to sort out a back-office mess that involves about £100 million in share certificate. After successfully completing his job assignment, Nick was transferred to Barings in Singapore to work as a derivative trader for both Singapore and Japan. Nick caused
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Nick were responsible for both the trading floor and the back office settlement.

• Risk assessment

1. Business risks: In this case, business risks were identified but managers took it too lightly, so the risks weren’t discussed with the board of directors. Nick was entrusted with too much power so they thought he could handle them as he said.

2. Evaluation of risks: The board and management didn’t properly evaluate risks regarding to new personnel and business activities since they let Nick in charge of the whole team of people that he recruited. Managers should have recruited employees themselves so they can give them appropriate training for the job and what they are supposed to act when they see illegal action.

3. Control issues when entering new market: The board and manager didn’t discuss and consider control issues when entering new markets since they didn’t take into consideration the distance, as well as how inexperienced the managers are. Thus, when Nick made mistake and they found out, his supervisor Simon Jones wasn’t experienced enough to go any deeper in the case except asking questions and believed in things that Nick explained.

4. Managing current and new business activities: there aren’t enough sufficient people who are competent and knowledgeable to manage current and new business activities and they haven’t been provided with adequate resources. In the movie, Nick recruited people for his team, but