Risk and Corporate Responsibility

It is now widely agreed that the primary responsibilities for risk reduction and disclosure of risk rest on corporations, but the government continues to play a controversial role in enforcing corporate responsibilities (Beauchamp and Bowie 179).

One of the areas of risk noted by Beauchamp and Bowie is the risk to investors and the need to protect investors from this risk. The authors note the complexities involved in this issue and the tension created among banks, brokerage houses, government entities, and investors by attempts to reduce risk:

Brokerage houses, money managers, and investment counselors demand as much freedom as possible to deal with their clients. . . Brokers with a large client base often do not adequately grasp the risk attached to the financial instruments they sell. Monitoring systems are usually loose, and direct supervisors do not closely track how investments are sold or which, if any, disclosures are made to clients (Beauchamp and Bowie 183-184).

A recent case in international banking points to the problems involved in controlling risk in financial transactions and the difficulty of assigning responsibility. The case also recalls ear

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few wealthy individuals (Kaye 68-69). In July, 1995 the Bank of England issued a report concluding that Leeson had acted alone and had fooled his superiors until it was too late to save the bank. A report from Singapore investigators in October, however, came to a different conclusions. This report found that Barings was negligent in its operations and that at least some of Leeson's superiors knew or suspected that something was wrong before the bank fell apart. The report claims that both Peter Norris, former chief executive officer of Barings Investment Bank, and James Bax, former managing director of Barings' Singapore unit, deliberately hindered investigations into irregularities in Leeson's accounts, charges that both men deny. The question raised refers to a ruse by which Leeson reconciled his year-end accounts in 1994, at which time he fabricated a $79 million credit from Spear, Leeds & Kellogg, a New York Citybased securities trader, to offset his losses. Barings' external auditors questioned the entry, and Leeson responded by forging faxes from Spear, Leeds & Kellogg, Citibank, and one of his superiors in London to prove that the money had been paid to Barings as he claimed. The auditors accepted this explanatio
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Some common words found in the essay are:
Beauchamp Bowie, Coping Ups, Norris Bax, Congress FDIC, National Bank, Crédit Lyonnais, European European, Peter David, Hong Kong, Nicholas Leeson, bank failures, economist april, coping ups, mutual funds, barings bank, banking industry, barings fiasco, bank failure, beauchamp bowie, spear leeds kellogg, 27 1996, april 27 1996, economist april 27, insolvent banks kaufman, britain's barings bank,
Approximate Word count = 2695
Approximate Pages = 11 (250 words per page)

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