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Consultant: Subprime Crisis Is 'Master Class' in Risk-Management Failure

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According to Ramesh Venkataraman, a managing director for corporate governance and compliance consultancy CurAlea, the subprime lending crisis could be "a master class in risk-management failure." He recently told The Hindu:

How would you explain large global banks and investment firms not having anticipated the risks, when they should have been aware that mortgage lenders were chasing borrowers with lending practices that were too aggressive to be sustainable?

He says the results suggest short-term pressures caused the affected companies to engage in risky behavior. His theory is proved in part by the admission of UBS officials in anticipation of Wednesday's annual shareholder meeting.

 

Though the majority of Venkataraman's interview with Hindu writer D. Murali focuses on risk management in India's businesses, many of his insights are instructive to businesses anywhere, both large and small. For instance, he notes that enterprise risk management must have measurable deliverables to move beyond a mere exercise in compliance. Moreover, he says effective risk-management processes must be "seamlessly integrated" with a company's existing planning processes.

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