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Econ Stats

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1. Organization structured for efficiency, effectiveness and reasonable internal control: In the Barings bank case, the senior executives and board members had limited knowledge of derivatives; however, they enjoyed the celebration of the success of profits in Singapore branch without evaluating deeply into how Nick Leeson brought in the huge profits and potential risks. The senior management was too satisfied with about the short-term profit. Therefore, they did not aware of the any important activities of the company and did not notice the unauthorized activities in an account named Error Account #88888 in SIMEX by leeson at the beginning and the profits he made for himself by the end.

2. Integrity, Ethical values: both the board members and senior executives cared more about the profits they have earned rather than setting a consistent example of high integrity and ethical behaviors. There was no a written code of conduct for either employees or the senior managers. Furthermore, there were also no ethical trainings for them. Therefore, employees and seniors managements did not have the standards of being integrity and ethical. Since Leeson became the most important person in the Singapore branch, the managers treated him differently compared to other employees, Even though he broke the law during the time in Singapore, there was no punishment to him from the company. In another situation, Leeson tried to cover Kim Wong's mistake during a trading process, but he lose another 40,000 pound. He put all the losses into his #88888 account and lied to simon jones about everything.

3. Financial reporting deficiency: Barings Bank's office located in London did not ask for any record for any transaction that either traders or their clients did while Leeson was in Singapore. In the same breath, Leeson only needed to report profits at the end of each month, meaning he was able to cover some of the losses. As soon as the managers noticed the complications, they didn't take any measures and were still unaware of Leeson's doings. Consequently, Leeson hid his illegal actions and profits from the company through reporting.

4. Human resources standards: hired a young and unknowledgeable employee is one of the biggest mistakes in the baring sank case. Kim did not have any experiences in the trading area and also had no knowledge about the trading process. Due to Kim's mistake, the company loss a large amount of money. Moreover, the other traders they hired in Singapore who had neither a lot of experiences nor training before they get into the position. They hired these employees because the Singapore branch try to cut their payroll cost.

5. Assigns authority and responsibility with integrity: when lesson was in Singapore, he was assigned too many positions; therefore, it was hard for the managers to control him in some ways. Brenda Granger, who was in the Settlements Department in the London office, transferred the funds to leeson on a daily basis without asking the reason and later she suspected leeson's might involve some unethical and unauthorized activities, but she did not report or perform her position with integrity. In another situation, tonty railton miss integrity by making decision for the company after listen to leeson and baker's report instead of looking for the solid financial statement and checking the figures on the financial reports.

6. Commitment to competence: tony ration from the London office went to Singapore as and internal auditor when he found out there was something wrong with the company's accounts' figure, therefore, he went to the trading place and tried to talk to leeson. Leeson pretended he was so busy of trading and doing some important work. Thus, tony thought time was more important for trading and he compromised.

7. The attention and direction provided by the board of direction: as the highest level in London office, when the senior executives and board of directors heard the accident happened in Singapore about leeson, they were planning the fire him. However, after they heard about hick leeson's story about the large profits he had brought in for the company from Asia, the highest level of management decided to leave the decision to be made by Singapore branch policy.

8. Consistent management philosophy and operating sytles: one of the most important things to the Barings Bank was making profits for themselves rather than caring about their employees. The managers wanted them to work even at time when imployees were at home and had their private lives. For example, simon jones, leeson's boss, who called leeson when he was sleeping in the middle of the night and asking him to make profits for the company.

Risk Assessment

1. Rapid growth: baring bank did not aware of the large profits that leeson broght them in the first week of when he was assigned to the Singapore branch. The senior management celebrated the success of the Singapore office rather than aware of the potential risks of this rapid growth of the profits. There were no senior managers in the London office either checked or followed up with the success in Singapore. Therefore, senior managers did not recognize the breakdown of the leeson's reported profits.

2. Operated restructuring: there should be a segregate of duties in the Singapore branch which might able to prevent his unauthorized trading. In the case, leeson was in charge of both the trading desk and the back office which involved a lot of important works. Therefore, leeson was able to settle his own trades' transaction from the trading desk and reconcile the statements, reports, as well as most of the entires in the back office. Therefore, he could hide the profits he earned for himself and cover the losses through the #88888 account. Since he held the important role in the office, he placed an sent the fake information on his reports to the London office.

3. Human error risk: kim wong, who was one of the new hired employees, did not have any training backgrounds. Therefore, she made the mistake which caused a loss of 20,000 ponds.

4. New lines, products and activities: leeson



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