How banks work

My great grandfather was a banker in Brookings, South Dakota – a town built around a rail junction deep in farm country. His name was “John David Wilson.” Everyone called him “J.D.” He was a resourceful, hard-working teetotaler, married to a woman just as smart as he was. They bought a house with extra bedrooms and took in railway[…]

On Risk Culture: Making Friends with 220 dot 13b

This piece also appeared in the Australian Financial Review. I was in a crowded restaurant the other day, discussing CPS 220 with a friend.  The woman at the next table decided to join our conversation.  “I don’t know about you,” she said, “but I love the new robot.  He’s small and determined, but more expressive[…]

Why it’s critical to care about board culture

A lot of what we believe about management comes from the military. Organization charts display hierarchy. Boards have authority and ultimate responsibility but they cannot accomplish their mission by issuing orders. In creating boards, and judging boards, we are interested in soft issues as well as hard. We care about culture. I want to share[…]

Conversation as risk management

To plunge right in, do you know that curve with a long tail on one side that plots size of loss on the x-axis and frequency on the y- axis? I want to divide it into three parts. There’s the big pile of business-as-usual outcomes on the left of the graph. There’s the long skinny[…]

Governance – taming the beast

If you take an interest in the conduct and regulation of banks, you encounter the word, “governance,” almost immediately. The Australian Prudential Regulatory Authority (“APRA”) has a standard with that title.1 The Basel Committee on Banking Supervision (“BCBS”) has issued a series of documents on “corporate governance for banks.” The newest version (the “2014 Guidelines”)2[…]

Lessons from a career in banking

When I got an appointment as an executive-in-residence and fellow at the University of Melbourne, I consulted an old friend who’s had an academic career. I wanted to know what to expect? “They’ll probably ask you to give a little talk about your work,” he told me. He meant my research focus. I interpreted “my[…]

Thinking about banking

Some years ago, I was introduced to a well-known writer at a party in Melbourne. “Harrison’s a banker,” my host said helpfully. “Gee,” responded the writer without missing a beat, “I’ve never met anyone in organized crime before.” I spent half a second searching for a clever response. But the Global Financial Crisis was raging,[…]

Why bankers should write novels

Writing novels will teach you that there has to be a story. We humans are programmed to want one. It is how we organise reality. If you make your living lending money or trading bonds or writing insurance you care about remote but plausible contingencies. To a novelist, remote but plausible contingencies are plots. This[…]