With news of SociétéGénérale’s record beating fraud breaking during the conference, AMRAE’s well attended annual risk symposium turned out to be an interesting affair
Held at the queen of Norman beach resorts, Deauville, the 16th conference of the French risk managers association (AMRAE) promised to be an interesting and entertaining experience.
It was a chance for the almost 1500 delegates to meet AMRAE’s incoming president, Gérard Lancner, and listen to his opening speech outlining the role of the risk manager as the champion of reason in the face of an ever more turbulent and fearful world.
The usual list of threats occupied the agenda – from global warming, war, and economic breakdown, to a failure of energy supplies. And delegates used the opportunity to discuss ways of working together, including engaging with the wider risk community.
The announcement by SociétéGénérale, on the second day of the conference, of a record breaking 4.9bn Euro loss through the actions of one of its traders, brought home with a shudder the need for large organisations to fully embed a culture of risk management.
The banks risk manager, Michel Yarhi, as president of the conference was cruelly thrust into the limelight. He played down the incident—claiming the loss would be covered by the bank’s insurance, provided that it was due to deliberate fraud or a lust for self enrichment.
It turned out, however, that the rogue trader, Jerome Kerviel, made no profit from the secret fraud. He now faces preliminary charges of forgery, breach of trust and unauthorized computer activity. An ongoing investigation by French authorities has so far blamed a failure in the bank’s internal controls for the loss.
The event wrapped up with a topical debate on the subject: ‘Is the sky about to fall on our heads?’—the idea being risk managers should apply reason to counteract fear of the unknown. Recent events, in particular the loss suffered by Société Générale, will have done nothing to allay fears. Can reason conquer fear? The debate remains unanswered.
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Timeline of events in the SocGen rogue trader scandal
November 07: SocGen is thought to have been warned about positions taken by Kerviel by derivatives exchange Eurex
January 9/10: A member of the SocGen board sells his stock in the company
January 18/19: SocGen begins an investigation into unauthorised trading activity
January 20: The French authorities are informed about the banks total exposure
January 21: Global equity markets plunge, speculators blame fears of a US recession
January 24: SocGen's losses are announced publicly
January 26: Kerviel is brought in for questioning
January 30: An association of shareholders and former employees of SocGen initiates legal action against the bank for its handling of the rogue trader scandal