Here we go again. Banks ought to have the best risk management. But whatever safeguards were in place didn’t prevent Silicon Valley Bank from failing, destroying over $40 billion in shareholder value, and forcing unprecedented government intervention to protect depositors.
How Banks Can Finally Get Risk Management Right
SVB was a cautionary tale.
April 28, 2023
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Summary.
Banks have three lines of defense for managing risk — and then regulators are the fourth line of defense. In the case of Silicon Valley Bank, all four failed. If banks want to manage risk better, one good place to start is making sure a Chief Risk Officer is in place and a board-level risk committee is in place. And the people on that committee should have real experience in managing enterprise risk.