In interesting article in the Minneapolis Star Tribune from John Stout, former chairman of American Bar Association’s Corporate Governance Committee and current shareholder at Fredrickson and Byron in Minneapolis, discusses how the Federal Reserve Board put blame on the Wells Fargo Board for many transgressions related to their recent scandal. He also provides insights on how Boards can work to get the information they need to do their jobs and keep their companies from facing a similar fate as Well Fargo. This article is well worth the read.
The question we have is, when Mr. Stout discusses early in the article that the Board didn’t have a “sufficiently robust risk management process in place to assess and mitigate the risks of that strategy”, whether there was any/enough discussion about whether the steps/initiatives to reach the goal were in alignment with the mission and vision of the bank? Risk management process are needed and appropriate, but if organizations are well aligned, such issues get caught early and employees are much more inclined to make the right decisions at the right time. Wasted energy from onerous risk management to watch over people’s actions is reduced greatly.