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Skadi Limited helps Britain’s race walk Champion @TomBosworth reach his @talentbacker target

Skadi Limited helps Britain’s race walk Champion @TomBosworth reach his @talentbacker target

Tom Bosworth has his sights set on a top 10 finish at the Rio de Janeiro Olympics. In order to achieve that Tom is looking for funding to allow him to train full time. Skadi Limited made a contribution this morning through Talent Backer to make sure Tom achieved his target before the deadline closed. By way of thanks Tom has kindly offered to give the young race walkers at Blackheath and Bromley Harriers AC some coaching.

Nicolas Corry, Managing Director at Skadi Limited, said “We were glad to have the opportunity to help a local athlete. We are pleased that this has benefited Blackheath and Bromley Harriers’ young athletes, a local club we greatly admire. We truly wish him well.”

Tom holds the 5km British Record, and is Britain’s number 1 20km Race Walker. On the road to Rio de Janeiro, Tom will be looking for a good performance at the 2015 World Athletics Championships in Beijing.

Tom’s talent backer page can be found here:

http://www.talentbacker.com/talents/view/tom-bosworth

The burden on bank management gets ever heavier

The burden on bank management gets ever heavier

William Vincent, Senior Consultant, william.vincent@skadilimited.co

Mark Carney’s words in Singapore are enough to send a chill down the back of any senior manager in any bank. He said that the succession of scandals:

“mean it is simply untenable now to argue that the problem is one of a few bad apples. The issue is with the barrels in which they are stored”.

“Leaders and senior managers must be personally responsible for setting the cultural norms of their institutions. But in some parts of the financial sector, the link between seniority and accountability had become blurred and, in some cases, severed.”

Management is no longer just responsible for running the organisation for which he or she is responsible: they are also to be legally responsible for setting “the cultural norms” of that organisation. Accordingly, it won’t just be the culprit in any scandal who suffers, or the bank for which they work. Their managers, too, will be made personally to carry the can, whether or not they approved of, or even knew of, the activities concerned.

The erosion of the burden of proof is stunning. Already, managers will have to prove that their actions were not imprudent in any legal case resulting from the current regulatory deluge: under Carney’s Law, even that will not be enough, because now not having the correct (i.e. regulator-approved) “cultural norms” in place could in itself be enough to destroy the career and financial position of a manager.

The implications are wide-ranging, but this clearly puts an added burden on management and the audit function which supports it. In order to cover themselves, management will have to be assured that the products for which they are responsible are working not only within the letter of the regulations and the bank’s own controls, but also are following a culture of customer-care and honesty at all times and under all conditions. The problem, of course, is that culture can be defined differently by different people, so banks will have to impose standards of behaviour that go beyond the letter of the law.

It is hard to see how management and auditors will be able without properly qualified help to determine what standards should be followed, and what cultural norms should be established.

Clearly, therefore, there is a need for banks to take advantage of independent expertise: people with senior-level experience of the areas which will come under the most scrutiny, notably at the “sharp end” of investment banking, and with a profound understanding not just of how traders and other professionals work and even think – poachers turned gamekeepers, in other words.

At Skadi Limited we can offer exactly such expertise. With decades of experience in trading, analysis and management, we can “see” things that less experienced people will miss, helping audit to identify issues that need to be flagged and assisting in the process of presenting those findings on a equal footing to senior management.

HSBC’s risk aversion warning highlights challenge facing Auditors

HSBC’s risk aversion warning highlights challenge facing Auditors

William Vincent, Senior Consultant, william.vincent@skadilimited.co

Bank Chairmen tend to be diplomatic people, so recent comments made by Douglas Flint, HSBC’s Chairman, are truly remarkable.

 

The nub of his remarks was that there is “an observable and growing danger of disproportionate risk aversion creeping into decision making in our business as individuals, facing uncertainty as to what may be criticised with hindsight and receiving a zero tolerance of error, seek to protect themselves and the firm from future censure”.

 

In other words, bankers are becoming paralysed by fear that if they take a risk, any risk, which goes wrong (and it is the nature of risks that some will) they will be criticised, pilloried, fired or even, under current proposals, jailed. As if this wasn’t enough, he also laid into the growing chaos of the regulatory regime, as ever-more demands are made on banks by the authorities. It is worth quoting him at some length.

 

He attacks a “regulatory reform programme that is unfortunately increasingly fragmented, often extra-territorial, still evolving and still adding definition is hugely consumptive of resources that would otherwise be customer facing. Add to this recent obligations to perform highly granular multiple stress tests which are inconsistent in definition and scenarios between major jurisdictions and so require considerable duplication of effort; recently announced significant wholesale market practice and competition reviews in the UK; re-organising the financial, operational and structural framework of the Group to respond to evolving thinking on cross-border resolution protocols; and, finally, planning what will be a multi-year project to separate and establish the ring-fenced bank in the UK, and the dimension of the execution risk is obvious”.

 

It is clear that banks are facing unprecedented challenges. Indeed, if the behemoth that is HSBC is having resource problems in dealing with the avalanche of new laws, regulations and requirements, how much harder must it be for banks that lack HSBC’s scale?

 

The audit function, of course, is right in the front line of all this. Not only must it undertake its usual duties of assessment, oversight and reporting, it must face the additional burdens of ensuring that all departments are aware of the new regimes, and are meeting their requirements. As these are extremely complex, and are changing rapidly, it is a huge ask for both auditors and those they are auditing to keep up to date, and ensure that the requirements are met. This is important in any circumstances, but when senior managers could be imprisoned for not meeting regulatory demands, and when ignorance will not be allowed as an excuse, it becomes even more vital.

 

The only way round the related issues of regulatory overkill and extreme risk aversion is for all relevant staff know exactly what the regulations state, and how they apply to them. Only then can management be in a position to accept risk, and thus generate the returns that pay the staff and reward the shareholders, rather than play safe and simply avoid it. However, keeping up with the regulations, understanding and interpreting them, is a major job, requiring specialist expertise that it is unreasonable to expect audit professionals and line bankers to possess, so the understandable response is to play safe and accept the adverse consequences. If this position becomes the default, risk aversion will slowly but surely strangle the banking industry.

 

However, a solution does exist. The logical thing for banks to do is to utilise the expertise that exists outside the industry. Here at Skadi, for example, we have the expertise to work closely with the audit function to ensure that all departments are aware of what the regulations involve, and how they will apply to them. Thus armed, and with the confidence that even hostile regulators will be assured that every step has been taken to ensure compliance, management will be able to accept risk in the knowledge that they are not breaching the regulations, rather than simply avoiding risk altogether.

 

The most successful banks in the coming years will be those which have tailored their businesses to fit the new regulatory regime: those which know exactly what the regulations are, what they mean, and precisely what is involved in meeting them, will have a crucial competitive advantage over those that don’t.