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Corporate Governance and Risk Management - Assignment

   

Added on  2021-05-31

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FinanceLeadership Management
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Corporate Governance and Risk Management 1Corporate Governance and Risk ManagementNameInstitutionANSWER Q1TAFP was involved in a fraud case during the year 2003 to 2012.The financial planners interfered with their customers files and forged their documents by forging their signatures,1 to transfer clients’ money and invest it in extremely high risk investments. Even though they knew that what they were doing was wrong, they did this in order to personally benefit by earning higher commissions and bonuses from the bank. The senior management has highly contributed to the failures and loses faced by the clients who entrust their bank and opt to deposit and save their money with them. The managers convinced the clients of taking care of their money and being safe in their bank, 2 yet they used the clients’ money in the wrong way. They would forge their documents to get access to the money and use it maximize their profit making in collectively getting high commission without caring how it would affect the client in future. The account owners would be upset if they find out that their money was invested in risk projects to 1. V, Aebi, Sabato, G. and Schmid, M., 2012. Risk management, corporate governance, and bankperformance in the financial crisis. Journal of Banking & Finance, 36(12), pp.3213-3226.2. Risk management. Accounting, Auditing & Accountability Journal, 21(3), pp.337-361.
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Corporate Governance and Risk Management 2work for the benefit of the bank. The managers would defend themselves when caught. They toldthe clients that their money got lost in misfortunes. These kinds of behaviors are inhuman for it caused a great hurt to the affected clients. Losing money which one has worked upon saving for another man’s greed really hurts and this behavior should be discouraged from any money dealers that belong to many people rather than individual. As the saying goes once beaten twice shy, the clients who experienced the results of this risky game decided to completely withdraw from that bank and even filled a complaint to be compensated. This caused a great lose to both the clients and also the bank at large. If placed in the place of Sam Venus, 3 the CEO of TABS, I would suggest that heavy fines be imposed on the irresponsible people who had indirectly stole people’s money, but directly tarnished the name of the bank. They would pay back the clients’ money and at the same time lose their jobs. I would have handled the case as early as the whistleblowers started to react, 4 not allowing further loses to be incurred. Those who have acquired higher positions in the company using this dangerous method should be demoted and even temporarily stop job for investigations to take place. If with evidence found guilty, consequences would follow without any delay. These cases would lead to some new additional rules that no money that would be moved from anyone’s account to the risky investment without their physical appearance before the manager rather than just signing of the documents. All this would be for the benefit of both the bank itself and its members to mitigate similar future risk from reoccurring.3. A, Bhimani, 2009. Risk management, corporate governance and management accounting: Emerging interdependencies.4. C, Francoeur, Labelle, R. and Sinclair-Desgagné, B., 2008. Gender diversity in corporate governance and top management. Journal of business ethics, 81(1), pp.83-95.
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Corporate Governance and Risk Management 3ANSWER Q2A company’s culture would therefore influence the behavior of its employees either positively ornegatively. A positive culture that shows benefit to the company and the people working within should be encouraged and supported from all directions while that which causes harm to either the company or any of the employees or clients should be discouraged and diminished. According to TABs remuneration plan, 5there culture consisted of a saying, “meet your sales targets, or surrender your rice bowl”. This meant that, if one wishes to see increment in their commissions and enjoy their bonuses, they had to work hard in convincing more clients to participate in investing in the risky investments. The employees tried their level best including dishonest and unfair means, like forging their client’s documents to win them without their knowhow and permission, fearing to surrender their rice bowl. For example in the case study, Don being one of the top most writers,6he was amassing a big number of clients investing with him, notched sales through corrupt means and other dishonest acts. When Bloe reported the matter, he didn’t believe what response was taken. The manager brushed the issue aside instead of dealing with the case appropriately. Little did they know that Don was under protection and a top earner of TAB due to his status? This encouraged the kind of behavior observed from the 5. P.C, Godfrey, Merrill, C.B. and Hansen, J.M., 2009. The relationship between corporate socialresponsibility and shareholder value: An empirical test of the risk management hypothesis. Strategic management journal, 30(4), pp.425-445.6. E, Humphreys, 2008. Information security management standards: Compliance, governance and risk management. Information security technical report, 13(4), pp.247-255.
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