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Not Just One Man - Barings
II. Lessons from Leeson
Numerous reports have come out over the last three years with recommendations on best practices in risk management. (see key risk concepts - risk control.) Barings violated almost every recommendation. Because its management singularly failed to institute a proper managerial, financial and operational control system, the firm did not catch on, in time, to what Leeson was up to. Since the foundations for effective controls were weak, it is not surprising that the firm's flimsy system of checks and balances failed at a number of operational and management levels and in more than one location. The lessons from the Barings collapse can be divided into five main headings:
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