Case | HBS Case Collection | July 2009 (Revised January 2012)

Risk Management at Wellfleet Bank: All That Glitters Is Not Gold

by Anette Mikes

Abstract

This case motivates a debate on the role of staff functions, such as risk management: what does it mean for them to be independent, and at the same time, to partner the business lines? The case describes the risk assessment process in the corporate banking arm of Wellfleet Bank (cca. 2006-2009) around an illustrative business proposal in the corporate lending business, and illustrates the decision challenges faced by the case protagonists (two senior risk officers of the Group Credit Committee)—who grapple with the tensions common between the sales organization and the risk control function in large financial institutions. The discussion of the proposal particularly evokes the cultural tension between the risk function and the business line: should the risk function play the role of policeman or business partner?

Keywords: Decision Choices and Conditions; Judgments; Credit; Banks and Banking; Governance Controls; Risk Management; Mathematical Methods;

Citation:

Mikes, Anette. "Risk Management at Wellfleet Bank: All That Glitters Is Not Gold." Harvard Business School Case 110-011, July 2009. (Revised January 2012.)