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Case
| HBS Case Collection
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2011
(Revised from original 2009 version)
Risk Management at Wellfleet Bank: Deciding about "Megadeals"
by
Anette Mikes
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Abstract
Inspired by one of the few banks that successfully weathered the 2007-2009 credit crisis, the case illustrates risk management in a corporate finance business. Chief executive Alastair Dowes has to decide if the risk governance process is adequate to uncover mega-risks in the portfolio, based on reflections on the risk assessment and sanctioning of two $1 bn credit proposals. Students will be invited to assess and review the risks in the two proposals, and to arrive at a decision (whether Wellfleet should accept them or not). At the same time, students will learn that gray-area risk decisions and, in particular, risk-adjusted performance measurement can rarely be automated. Risk governance requires executives to strike a balance between risk modeling and qualitative business judgment - a holistic (rather than silo-based) view of risks.
Keywords: Risk Management;
Decision Making;
Performance Evaluation;
Credit;
Balance and Stability;
Integrated Corporate Reporting;
Decision Choices and Conditions;
Negotiation Offer;
Performance Effectiveness;
Corporate Finance;
Banking Industry;
Citation:
Mikes, Anette. Risk Management at Wellfleet Bank: Deciding about "Megadeals". Harvard Business School Case 109-071, May 2011. (Revised from original March 2009 version.)