Crisis Wasted? Leading Risk Managers on Risk Culture

8 Mark Lawrence

Melbourne, 5 January 2015

Regulators are setting the agenda and much has changed and is changing as a result. But the real risk culture question is about how to “maintain the rage” when the pressure from regulators is off.

Mark Lawrence is an adviser to banks and bank supervisors on risk appetite, risk culture and governance. He previously worked at McKinsey and was CRO of ANZ, a large Australian bank. Prior to that, he managed risk at Merrill Lynch in New York.

He explains the thinking behind recent regulation and where it is heading.

Mark Lawrence:

I grew up in Australia and studied pure mathematics and theoretical physics at the Australian National University. My first job was with the Commonwealth Bank of Australia in Sydney from 1982 to 1983.

Then I went to the USA to do a PhD in mathematics at the University of Wisconsin-Madison. For my minor subject I chose finance, which was refused initially on the grounds that there was no connection between mathematics and finance (!). But fortunately, armed with the Black and Scholes paper I was able to persuade the dean otherwise.

My graduate studies were interrupted in September 1986 when I joined Merrill Lynch Capital Markets and unwittingly became a member of the first generation of “rocket scientists”, or “quants”, working on Wall Street. I was put into a newly formed group called the Hedging and Arbitrage Group, which consisted of seven or eight quants attached to the main trading desks. Although there was ...