Risk Management at Wellfleet Bank: Abridged
Posted: 2 Aug 2009
Date Written: July 27, 2009
Inspired by one of the few banks that successfully weathered the 2007-2009 credit crisis, the case illustrates risk management in the world of corporate lending. Chief executive Alastair Dowes has to decide if the risk governance process is adequate to uncover mega-risks, based on reflections on the risk assessment and sanctioning of a $1 bn credit proposals. Students will be invited to assess and review the risks in the proposal, and to arrive at a decision (whether Wellfleet should accept it or not). At the same time, students will learn that gray-area risk decisions and, in particular, risk-adjusted performance measurement can rarely be automated. Risk governance requires executives to strike a balance between risk modeling and qualitative business judgment - a holistic (rather than silo-based) view of risks.
JEL Classification: A20, M40
Suggested Citation: Suggested Citation