ONCE UPON A TIME:  the relevance of history in risk management; part 4

Risk Watch with Alberta Quarcoopome: THE CLOSING BELL… end of year preparations by banks
Alberta Quarcoopome

“A stitch in time saves nine”… An American proverb

(This is a continuation of a series first published in July and August 2014)

Hello my Readers, I hope you had a good week and were not too disturbed about the history and list of bank runs experienced over the centuries. If your financial institution is showing some of the symptoms that occurred before bank runs, please be guided.

What is the difference between bank runs and bank crises? While a bank run affects one financial institution, a banking crisis is marked by bank runs that lead to the failure of financial institutions, or by the failure of one financial institution that starts a string of similar failures.

This week, I will take you through the history of various banking crises which has occurred since the eighteenth century, ranging from smaller ones localized in countries through to the Great Depression in the 1930s in USA and the recent global banking crises in 2008 as well as our local Ghanaian examples.


18th century

  • Crisis of 1763, started in Amsterdam, begun by the collapse of Leendert Pieter de Neufville, spread to Germany and Scandinavia
  • Crisis of 1772–1773in London and Amsterdam, begun by the collapse of the bankers Neal, James, Fordyce and Down.
  • Panic of 1792, New York
  • Panic of 1796–1797, Britain and United States

19th century 

  • Panic of 1819, a U.S. recession with bank failures; culmination of U.S.’s first boom-to-bust economic cycle
  • Panic of 1825, a pervasive British recession in which many banks failed, nearly including the Bank of England
  • Panic of 1837, a U.S. recession with bank failures, followed by a 5-year depression
  • Panic of 1847, United Kingdom
  • Panic of 1857, a U.S. recession with bank failures
  • Panic of 1866, Europe
  • Panic of 1873, a U.S. recession with bank failures, followed by a 4-year depression
  • Panic of 1884, United States and Europe
  • Panic of 1890, mainly affecting the United Kingdom and Argentina
  • Panic of 1893, a U.S. recession with bank failures

20th century

  • Panic of 1901, a U.S. economic recession that started a fight for financial control of the Northern Pacific Railway
  • Panic of 1907, a U.S. economic recession with bank failures
  • Shōwa Financial Crisis, a 1927 Japanese financial panicthat resulted in mass bank failures across the Empire of Japan.
  • Great Depression, the worst systemic banking crisis of the 20th century
  • Secondary banking crisis of 1973–1975in the UK
  • Swedish banking crisis (1990s)
  • 1998 Russian financial crisis
  • Argentine economic crisis (1999–2002)
  • 1998–99 Ecuador banking crisis

21st century

  • 2002 Uruguay banking crisis
  • Late-2000s financial crisis, including:
  • Subprime mortgage crisisin the U.S. starting in 2007
  • 2008 United Kingdom bank rescue package
  • 2009 United Kingdom bank rescue package
  • 2008–2009 Belgian financial crisis
  • 2008–2012 Icelandic financial crisis
  • 2008–2009 Russian financial crisis
  • 2008–2009 Ukrainian financial crisis
  • 2008–2012 Spanish financial crisis
  • 2008–2011 Irish banking crisis

The financial crisis of 2007–2008, also known as the Global Financial Crisis and 2008 financial crisis, is considered by many economists the worst financial crisis since the Great Depression of the 1930s. It resulted in the following:

  • The threat of total collapse of large financial institutions.
  • The bailoutof banks by national governments.
  • The downturns in stock markets around the world.
  • Suffering of the housing market, resulting in evictions, foreclosuresand prolonged unemployment.
  • The crisis played a significant role in the failure of key businesses.
  • Declines in consumer wealth estimated in trillions of U.S. dollars.
  • A downturn in economic activity leading to the 2008–2012 global recessionand contributing to the European sovereign-debt crisis.


Many causes for the financial crisis have been suggested, with varying weight assigned by experts. According to the U.S. Senate’s Levin–Coburn Report, the crisis was the result of:

  • “High risk, complex financial products’
  • Undisclosed conflicts of interest.
  • The failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.”

The Financial Crisis Inquiry Commission also concluded that the financial crisis was avoidable and was caused by:

  • “widespread failures in financial regulationand supervision.
  • “dramatic failures of corporate governance and risk managementat many systemically important financial institutions,”
  • A combination of excessive borrowing, risky investments, and lack of transparency” by financial institutions.
  • Ill preparation and inconsistent action by government that “added to the uncertainty and panic,”
  • A “systemic breakdown in accountability and ethics,”
  • “collapsing mortgage-lending standards and the mortgage securitization pipeline,”
  • deregulation of over-the-counterRderivatives, especially credit default swaps,
  • “the failures of credit rating agencies” to correctly price risk.

Food for thought

Dear Readers, I am sure some of you are still skeptical about these historical facts that research findings have stated. I cannot do much to convince you, but since we are in the business of banking, which is a global phenomenon, I entreat you to start taking the “Once upon a time” issues seriously. Some of us still think the issues are too remote, and therefore wish it away. Have you not realized that really, there is nothing new under the sun? 

The Home Stretch

Next week, the historical torch will reach the shores of our motherland. We shall come more down to earth and look at some bank runs and crises which our own country, Ghana, has experienced, and of course still experiencing at one level or another. Is history not repeating itself? Are we learning any lessons from what others have suffered? How are we sharing these lessons?

If your institution is going through this phase, what are you doing about it? Risk is not owned by the staff of the Risk Management departments. Since risk is in every activity we undertake, it is owned by everybody in the financial institution. From the one guarding the security post to the chairman of the board of directors.

If your boss is not listening, why do you not find a nice way to go about it? Don’t just criticize the systems for criticism’s sake. Use some facts and figures in your reports and make some recommendations to improve the situation. Whistle-blowing has not been formalized much in our parts of the world. Have a sense of belonging from any level you find yourself. “Alutas” don’t solve problems in offices. Pray hard to your Maker. I am a firm believer in a good straight dialogue, hitting hard with facts and figures and of course the “once upon a time” issues in history.

I know sometimes it is easier said than done, but don’t you worry………Press on. History is waiting to know what part you played in risk management in your financial institution. Will you be a part of the excesses and contribution to losses, or part of the preventive and mitigation of losses? Be proud of whatever role you are playing in the institution. Your children and grandchildren will read about it, or rather, you yourself will hit your chest hard one day as you tell the story of your bank to them saying……”once upon a time, I was part of the success story”

I will pause here. I wish you good experiences on your banking journey. For more insights please book a copy of my new book, “THE MODERN BRANCH MANAGER’S COMPANION” which involves the adoption of a multi-disciplinary approach in the practice of today’s branch management. It also shares invaluable insights on the mindset needed to navigate and make a difference in the changing dynamics of the banking industry. Call 0244333051 for your copy.



Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of Three books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story” and “The Modern Branch Manager’s Companion”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.


Website www.alkanbiz.com

Email:alberta@alkanbiz.com  or [email protected]

Tel: +233-0244333051/+233-0244611343







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