Wellfleet Bank Risk Management

1) What is “risk management” at Wellfleet Bank? Is it different for CEO Alastair Dawes, Chief

Risk Officer Patricia Cromwell, and Chief Credit Officer Catherine Richards? How?

Risk management is key component of Wallfleet Bank business success, cause higher risk means higher profits, but at the same time too much risk could lead to default so all the risks should be carefully evaluated. Also the environment is getting more risky, regulations are changing and competitors are getting stronger. In the bank risk-management should be independent and haves two major functions. One is to educate salespersons and the second one is to develop risk models. Bank’s top management demands “no-surprises” culture and the risk-management is delegated to Group Risk Committee which haves unlimited authority. Under the Group risk Committee there are 8 risk committees each of them evaluating different risks. The credit-approval should go through process called “Alpine Pass” which was considered to slow by relationship managers.

Alastair Dawes thinks that banks growing business were outpacing risk-management capacity and that he should have better handling on those mega risks. He also thought that for lot of deals quantitative and financial risk assessments had reached their limits and risk management went from science to art and risk and business should be in balance.

Risk officer Patricia Cromwell emphasized the importance of scientific risk measurement to have the ability to measure the risks in numbers and calculate the amount the bank could lose on a particular loan.

Catherine Richards saw risk-management more as an art not so much as a science because most of the models relied on data from past and in ever changing environment models could get out-dated and not always there were enough sufficient data available, so the risks should be evaluated fast enough, looking