CONCLUSION: LEESON’S LESSONSThe Bar

CONCLUSION: LEESON’S LESSONS
The Barings-Nick Leeson story is a spectacular anomaly that provides some
valuable lessons. Effective risk management requires a clear line of demarcation
between the back office (i.e., the individuals responsible for recording,
confirming, settling, reconciling, and reporting transactions) and the
front office (i.e., the traders). Otherwise, there will always be temptation to
fix the books to enhance performance. Without this separation, control systems
that monitor risks, such as trading limits, credit, liquidity, and cash
flows, lose most of their significance. Barings allowed Nick Leeson to settle
his own trades, by giving him authority over both the front and back office,
and as a result he could manipulate accounts at the Singapore branch,
while reporting fraudulent totals that appeared accurate. Giving Leeson authority
over both functions was equivalent to a farmer giving the fox responsibility
for counting the chickens in the chicken coop.
Perhaps the most embarrassing aspect of the Barings-Leeson catastrophe
was the role played by senior management (i.e., Leeson’s direct supervisors,
the bank’s management committee, and the board of directors), whose errors
were ones of omission rather than commission. Simply put, there was a
gaping lack of management control that gave too much autonomy to
Leeson, who was, in more ways than one, far beyond the scrutiny of his supervisors.
The directors in London thought Leeson was arbitraging, when,
in reality, he was taking outright positions and selling naked (i.e., unhedged)
puts and calls—both of which were clear violations of Barings’
rules. No one in the bank seems to have fully understood the risks that
Leeson was taking, and because he was reporting such large profits, no one
posed the hard questions that should have been asked. Leeson’s supervisors
should have had direct and immediate knowledge of his activities. Barings
management committee should have set up reporting systems to ensure
that important information on operational risks reached them

ผลลัพธ์ (อังกฤษ) 2:

Conclusion: LEESON'S LESSONS
The Barings-Nick Leeson Story is a Spectacular Anomaly that provides Some
Valuable Lessons. Effective risk Management requires a line of demarcation Clear
between the Back Office (IE, the individuals responsible for Recording,
Confirming, settling, reconciling, and Reporting transactions) and the
Front Office (IE, the Traders). Otherwise, Will there always be Temptation to
Fix the Books to Enhance Performance. Without this Separation, Control Systems
Monitor that risks, such as trading Limits, Credit, Liquidity, and Cash
flows, Lose Most of their significance. Nick Leeson Barings allowed to settle
his own trades, by giving Him the Front and Back Office Authority over both,
and as a Result He could Manipulate accounts at the Singapore Branch,
while totals that appeared Accurate Reporting fraudulent. Giving Leeson Authority
over both functions was Equivalent to a Farmer giving the Fox Responsibility
for Counting the Chickens in the Chicken Coop.
Perhaps the Most Embarrassing Aspect of the Barings-Leeson Catastrophe
was the role Played by senior Management (IE, Leeson's Direct Supervisors,
the. Bank's Management Committee, and the board of Directors), whose Errors
of omission rather than Commission were Ones. Simply Put, there was a
gaping Lack of Management Control that Gave Too much Autonomy to
Leeson, Who was, in more Ways than one, Far Beyond the Scrutiny of his Supervisors.
The Directors in London thought Leeson was arbitraging, when,
in Reality,. He was taking outright and selling Naked Positions (IE, Unhedged)
puts and calls-both of which were Clear Violations of Barings'
Rules. No one seems to have fully understood in the Bank the risks that
Leeson was taking, and because He was such Reporting Large Profits, no one
posed the hard questions that should have been asked. Leeson's Supervisors
should have had immediate and Direct Knowledge of his activities. Barings
Management Reporting Systems Committee should have SET up to ensure
that important information on operational risks reached them.