It is not my fault! – the blame game in risk management (2)
"If you blame others for your failures, do you credit them with your success?"
- Author Unknown
Dear Readers, last week, I examined the blame game in risk management and it came out clearly that risk should be owned by all staff, and not just the “Responsible Persons” in charge of risk under the three levels of defence model. This week, my concluding article attempts to examine the need for a paradigm shift in “people risk” management which can eventually stem the tide in losses in financial institutions. In addition to the usual risk awareness and techniques to prevent risk and losses, I will also make a few simple recommendations. Instead of the usual fracas between staff and management or inter and intra- departmental frictions, the blame game should end with the slogan - ALL HANDS ON DECK as depicted in today’s diagram and not the accusing hands in my previous article.
Kudos to the Training Team at Bayport Savings and Loans
I co-facilitated a training program at the National Banking College recently for Bayport Savings and Loans Company. I noticed something quite unusual……the presence of their Training Manager and her Deputy most of the time, monitoring all that went on. Today I wish to appreciate Madam Dora Dery and Mr. Ernest Tsiadey Topey for their untiring devotion to their duty, making sure that the participants as well as the Facilitators took their responsibilities very seriously. She encouraged them to be more interactive and even invited the Risk Manager to sit in. Sure, it was all about Fraud prevention and Operational Risk Management. If senior personnel will take training on risk and fraud more seriously, losses to institutions will be minimized. Madam Dora and Ernest, please continue your diligence and I hope it continues to yield fruits in your institution.
All hands on deck
Back to my case. As the saying goes in Pidgin English, “Na who cause am?” Whose fault is it when loss cases are exposed? A cursory glance at some bank scandals shows that losses can be caused from any desk in the bank, from any level or grade and by any gender. Moreover, not all losses are caused by fraud. Different people like to point fingers at different culprits. I believe that all staff should be each other’s keeper.
Questions to Ponder over
Last week I promised attempting some solutions towards problems involving “the people side” using practical ways of getting staff to know each other to enable them spot any red flags among peers. It will also include methods by which managers can prevent staff from falling prey to temptations on the job. Before then, let me start with a few questions to my readers who are employees:
- Do you have a clear cut (S.M.A.R.T) job description (JD)?
- Has it been signed off by you and your supervisor?
- Does it state your reporting relationships within your department/bank?
- Do you know your job purpose and your major outputs?
- Do you know your key responsibilities and major tasks critical to the successful performance of your role?
- Does your JD indicate how your role makes a significant contribution to the success of the bank?
- Do you have an Operations Manual that guides you in the performance of your role?
- Do you have a good knowledge/understanding of the Bank’s Policies/Procedures and general banking regulations and practices?
- Are you up-to-date with developments in operational risks issues within the banking landscape.
- Are you aware of an Offences and Sanctions Policy in your bank?
- Are you able to approach your supervisor/manager easily when you have challenges on the job?
- How does your Manager handle the challenges encountered on the job?
- Are you able to say no to some instructions from your boss some of which can land you into trouble?
- Can your manager be described as a coach or mentor?
- How often do you benefit from on the job training, refresher and new training programmes?
- Are you able to make recommendations to your manager in respect of suspicious transactions and activities by customers or staff?
- Does your manager treat you as a partner? Does he/she appreciate your passion for the job?
- Do you receive circulars on fraud alerts and how is it handled in your department?
- How do internal fraud cases impact on the staff? Are lessons learnt shared for staff to take note? Do you feel it is always a category of staff which is sanctioned?
- Are you facing peer pressure on the job or outside the job?
Know Your Staff (KYS)
Dear Managers, how well do you know your staff? How well do colleagues know each other? We have to respect each other’s privacy after close of work. However, there are various reasons why people enter places of employment, so beware of the few bad nuts with hidden agendas for seeking employment in financial institutions. The following Know Your Staff (KYS) tips may be of help:
- More regular staff meetings, some of which could be turned into “breakfast meetings” to make your staff more comfortable and open up more. Sometimes such a meeting with a few goodies either before work or after close of work can be financed by the manager and his or her officers. This small gesture will be appreciated by your staff for many years to come.
- As a manager, you do not really have to know where all your staff reside, but does at least one person know where a member lives?
- Use the morning meetings to motivate the staff and re-direct their energies into working for God, while waiting for their big moment of success in life. Perhaps it will even stop the bad nuts from yielding to the temptation. Try to greet your staff each morning while looking into their eyes. It pays to do that. Sometimes they only need words of encouragement. You can easily spot any unease among a staff member which may be a source of worry. See what you can do about it.
- Are your doors open to your staff and colleagues? This can encourage a subordinate to confide in you to watch out for some red flags you might have overlooked.
Ensuring appropriate skills enhancement to mitigate risk
- Does your staff have proper job descriptions which make them accountable for risk? If not, incorporate the ownership of risk into these job descriptions. Explain the JDs to them using practical examples and case studies. Make JD discussions more interesting and less intimidating.
- Explain the bank’s offences and sanctions policy to your staff and let them know the consequences of their actions and inactions. Share lessons learnt from incident reports with them.
- Ensure regular discussion of the bank’s operational guidelines to your staff and coach them where necessary. Do not encourage them to work with mere logic but insist that they refer to the manuals.
Advocating for a more Proactive role by Auditors
Sometimes the most serious revelation is that the acts of fraud are usually not detected by auditors. When an incident happens, many questions are asked….“where were the auditors and why didn’t they do their job right?” Other questions such as “how did it happen?” or “why couldn’t it be prevented or detected by the existing setup of internal controls?” and “what went wrong and were controls being performed the way they were designed ?” are all very legitimate and relevant questions that many people skip as they focus primarily on a target to blame. The focus here should rather be on undertaking a root cause analysis. Auditors should be able to get more involved in getting the right things done and not just rush to hot spots to look for whom to blame.
Mentoring and Coaching
Many risk incidents can be prevented if leaders were placed in a coaching and mentoring mode. There are too many managers rushed into their roles unprepared. It can be compared to teenage motherhood. Managers need more leadership and supervisory skills as they improve their listening and observational skills, to treat their staff like partners in risk management.
Bridging the Generational Gap: More Collaboration-Less Collision
Finally let me say that the generation gap is still lurking in the shadows. Because each generation has a different approach to work, collaboration can be difficult. If management does not address this, it results in a lack of innovation and costs time and money and eventually more risky. There is a need to blend the old and young. While younger staff are adept in modern technology, the older are slower to learn. Teach the older ones to improve their computer literacy to reduce laxity in controls. There should be a good balance and combination of both young and older staff to avoid brain drain. When older staff resign, retire and leave the bank, they take a lifetime of knowledge with them unless businesses take steps to capture what they know. While youthful exuberance is key to new trends and ideas to meet the demands of the industry, the strong work ethic and institutional knowledge of older staff are great attributes.
Turning the Scars into Opportunities for a new Version of Yourself
Finally, I wish to appeal to managers to halt the practice of putting all blame on junior officers just because they find them easier to punish. If you are the one that HAS to be punished, please pick yourself up and wear the scars on you as golden opportunities to learn lessons. Be like the Japanese who use gold to put broken pieces of a pot together, creating a beautiful design. You are not broken beyond repair. Nobody has had a perfect life. Turn something which is ugly into a new beautiful you, wearing your scars proudly. Don’t be ashamed of what has happened to you. Your experience will be needed in your next level.
Happy banking and please, no more blame games.
ABOUT THE AUTHOR
Alberta Quarcoopome is a Fellow of the Chartered Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.