Forum Archive Index - July 2000

[jesse <johne777@hotmail.com>]

Hi Brian
haven't read the book but I know the story well. Came across Mr Leeson
and Barings PLC doing a derivatives/risk management paper at uni. The
auditors warned management of the potential risk but, as you say, heads
in the sand attitude.
There are plenty of other stories like Barings, less well known perhaps,
like Robert Citron  of Orange County, California. He managed to lose
ratepayers $US1.6 billion, betting on which way interest rates would go.

The common thread amongst this lot is to much unchecked power given to
an individual. That allowed them to take higher than normal risks and
when the position went against them, it usually went bad quickly because
they were highly leveraged.
Its good to be reminded of these people I reckon. From them I've seen
that having some success shouldnt automatically mean you increase your
risk taking.
j




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