Season 2 | Ep. 45: Scary Stories of Risk Management

Happy Halloween! This special episode of the Risk Intel podcast features scary stories of risk management. Coming from real-life experiences from our team member’s days in banking. Host, Ed Vincent, is joined by Shawn Ryan, Beth Nilles, Niki White, Megan Turcios, Trent Terry, and Cathy Jackson for a series of short spooky stories. Curl up with a nice cider and get ready to hear the dark side of risk management, along with some tips to ensure you don’t end up a scary story yourself!

Shawn and the Keeper of Risks

Shaw Ryan shared a story based on a conversation he had with a bank CEO at a recent conference. This CEO claimed he didn’t need a risk management software, or even a spreadsheet, because he kept all of the banks risks in his head. While we highly recommend listening to Shawn’s slightly embellished story, the key takeaway is – organizational risk management is a must!

Having one person “keep in their head” all of the bank’s risk profile by just knowing what the risks are is not an effective or safe way to manage risk. If this bank’s CEO got sick, or decided to leave, the bank would not have any idea what risks are prevalent. It’s extremely important to embed a culture of risk within a financial institution.

Beth and the Vault of Banking Blunders

Beth Nilles shared two stories from her time as a banker. The first – when she was just starting out at a small, de novo bank in the loans department. A small change was made to the loan origination software which broke the system and the entire department wasn’t able to track loan originations for an entire week! Beth’s key takeaway – lock down certain processes within your software! A brand new employee should not be able to make big changes to the software without approvals.

Beth’s second story was about a bank her previous employer was thinking about acquiring. While going through the due diligence procedure, they found this old bank was not only keeping cash for UCC release fees in their vault, but also kept guns in their vaults of rural banks! Make sure to do your due diligence before entering an M&A agreement.

Niki and the Lost Spreadsheet

Niki White discussed her time spent leading in an audit department of a bank. They had a huge spreadsheet used for all their board reporting and financial statements. One quarter, as Niki began finalizing the spreadsheet to submit her reports, she noticed the balance sheet no longer balanced. Turns out, someone, trying to help, had gone through the workbook and broken it! Niki ended up spending hours redoing all of the work, coming down to the wire, but eventually submitting the reports on time. Make sure you’re locking down your permissions when having a shared workbook or even better implement an ERM platform or risk intelligence software!

Megan and the Importance of Personal Security

Megan recalled a time at a previous institution where coworkers would regularly send personal data, both client data and their own personal private information, via email! Things like account numbers, full name, address, and even their full social security number. This goes back to the same key takeaway from Shawn earlier – make sure you’re embedding a culture of risk within your organization. By educating your team members how their actions could affect both the organization and themselves.

Trent and the Loan Exception

Trent shared a scary story from his time at a small community bank. In this story, a local businessman was rejected for a loan by the bank’s underwriters. However, he was close to the CEO of the community bank, and the CEO went against the underwriters recommendation and provided the loan to the local businessman due to their personal relationship. This violates credit requirements and opens the bank up to a plethora of fines. Exceptions like this highlight the need for a strong and independent risk management team. A risk team that is empowered is able to push back, explain the risks of loan exceptions and not be overridden by an institutions leadership.

Cathy and the Missing Documents

In the last horror story, Cathy discussed a time in her banking experience when she was working on getting loans in the banks system. Lenders began sending incomplete applications, assuming they’d get the rest of the information later, since they just needed to send a signed note in order to get the loan in the system. The loan files began missing quite a lot of important documentation, causing future issues. It's important to make sure, as your working on reducing your hidden factories, the new processes aren’t creating new hidden factories!

We hope you enjoyed these cautionary tales from the frontlines of risk management! Risk may not always be quite this spooky, but it’s real experiences like these that remind us how important it is to be vigilant, prepared, and adaptable. Happy Halloween risk managers and ghouls!

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