Harvard Case - Risk Management of Wellfleet Bank

IPAG Business School

MIB Madrid Program

Risk Management

‘’ Risk Management at Wellfleet Bank: Deciding about Megadeals’’

1. a) What kind of risks does Wellfleet Bank face?

They consider financial (revenue risk) and other variety of business progress risks. Those risks are depends on industry and company structure. Credit Committee undertakes essential risks are Market Risk, Operational Risk, Compliance Risk, Country Risk (economic and political strength/weakness), Reputational Risk and Business Risk. Also company success is impacted by external factors such as competition, risky environment and internally complexity of products.

In my opinion not only financial numbers, company revenue, net profit, debt are the only measurements for risk management. These numbers figure our companies past success, also future business threats and opportunities is taking into account.

b) What are the challenges for the risk culture of the organization that its new focus on large corporate deals and its need to recruit relationship managers from investment banks create?

Actually the case explains that the flagship business for Wellfleet is corporate banking. They are strongly focused to enlarge transformational deals with clients. It is very profitable business for the bank. Risk culture of the organization works as a circle of Credit Committee, clients and client relationship managers who directly contact each other and understand their needs to find better profitable solution for booth side. Then the bank offer their proposal via client relationship manager. Most of the time Chief risk officer and head of client relationship disagreed over the proposals. Another issue is hierarchic work process in credit officers. Group Credit Committee required sing-off from senior credit officer and a regional credit officer before it got there. So this time period make the answer of...