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Reputability LLP are pioneers and leaders globally in the field of reputational risk and its root causes, behavioural risk and organisational risk. We help business leaders to find these widespread but hidden risks that regularly cause reputational disasters. We also teach leaders and risk teams about these risks. Here are our thoughts, and the thoughts of our guest bloggers, on some recent stories which have captured our attention. We are always interested to know what you think too.

Sunday, 15 July 2012

Whale harpoons JP Morgan


Six billion dollars lost.... Why?

It all began, in April 2013, 2013, with JP Morgan's ebullient CEO Jamie Dimon dismissing the stories that hedge funds had reason to bet against JPM's 'London Whale' as a “tempest in a teapot.”  There can't be any doubt he believed what he said.

By 11 May, Dimon was calling a press conference to explain a $2 billion trading loss.  Again no doubt he believed it.

Two months later, its been announced that the losses are nearly $6 billion.  He must be hoping it is true.

Something is clearly preventing Dimon and his board from knowing what is really going on within the business.

As Justin King said, you can't make good decisions without good information.  Garbage information usually means garbage decisions however talented the board and management.

So here are some $64 billion questions for the Board.
  • How much more of the information getting to JPM's board is garbage?  
  • Which bits might be unreliable?
  • How much information might be missing - and in what areas?
  • How can we reliably find out?
  • What might be causing us to have an information problem? 
  • And while we are about it, do we fully understand everything that is going on at JPM? 
No-one should think this is just a JP Morgan problem.  'Roads to Ruin' demonstrates how defective information flows can bring down empires - it's a frequent cause of corporate disasters.  All boards should be asking themselves questions like these.

Anthony Fitzsimmons
Reputability
London
www.reputability.co.uk

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