The Principles of Banking, 2nd Edition

CHAPTER 23Case Studies: Analysis, Problem Solving and Decision Making

Abstract

To illustrate some of the principles we have described in this book, this chapter describes real-world case studies and how they were addressed and ultimately solved.

In this chapter we aim to bring together all the elements of principle and sound best-practice approach which we have presented elsewhere in this book and join them together in a coherent, user-friendly format that should serve as a starting template for the “future of bank risk management”. A bank is a dynamic thing, always having to serve the needs of a diverse set of stakeholders often with opposing objectives. Managing the balance sheet to ensure the bank is long-term viable means “risk management” in a bank is really more about understanding the surrounding environment and adapting with it and the times; in the same vein, it should be less of a “tick box” process and more a pragmatic one. Analagous to a hospital consultant, extensive experience in real-world problem solving across different business models is often the best qualification for managing risk in a bank.

To help us in our endeavour we will use a number of real-world case studies to illustrate how the principles we have introduced in earlier chapters can be applied to solve issues as they arise. Banks, like all corporate entities, are collections of people with diverse backgrounds and experience. The process undertaken to effect change and/or improvement, principally ...