Magazine article The RMA Journal

It All Comes Back to Reputation

Magazine article The RMA Journal

It All Comes Back to Reputation

Article excerpt

SINCE BECOMING RMA chair in December, I've become aware that a theme is developing during my tenure. The industry and RMA have focused more intensely on governance issues. We are keenly aware that the risk management mistakes of the recent crisis may have been avoided if the management of our institutions had implemented stronger governance. Importantly, we would not have suffered the loss of public trust to the degree we have in recent years.

So it is reputation that I've come back to over and over again--at RMA board meetings, in these Leadership Letters, in addresses at the Annual Risk Management Conference, at GCOR, and at various chapter events throughout the country. It's hard to put the shine back on a tarnished reputation, especially when negative stories about institutions or individuals continue to be widely reported.

At the Annual Risk Management Conference in Dallas, I mentioned a New York Times op-ed piece that recounted instances of financial fraud, money laundering, interest rate fixing, and deceptive marketing practices at banks. At GCOR in Boston I discussed how to embed risk culture to drive value. In my first Leadership Letter, I told of casual conversations in the communities we serve in which other bankers and I were on the receiving end of less-than-flattering remarks about our industry from young people. I recalled the Depression-era image of bankers and how hard it was to erase that from the minds of the public.

In a February 28 speech, Fed Governor Sarah Bloom Raskin addressed the issue, noting that trust and reputation are critical to the well-being of the banking industry. She also pointed out how "supervisors can use their unique ability to see inside the institutions they examine to uncover some early indicators of reputational problems." One of the goals behind this approach is to link how risk intersects with investors, creditors, counterparties, and taxpayers. …

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