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Compact case
Supplement
-
Reference no. 9-110-030
Authors: Francois Brochet
Published by: Harvard Business Publishing
Originally published in: 2009
Version: 23 April 2010
Length: 3 pages
Data source: Published sources

Abstract

This case illustrates the tension/balance that firms with complex and risky business models must consider in designing their internal controls. It describes the environment in which a derivatives trader engaged in massive directional positions on major European stocks and indexes without being detected for over a year. Although the case could be used to teach the basics of internal controls, it is likely to be more effective by eliciting a debate about how predictable the incident was, and whether or not there was anything fundamentally flawed about the company''s choices in terms of strategy, control systems and culture. It also provides an opportunity to discuss the challenges of dealing jointly with a market-wide crisis (subprime) and a company-level crisis.
Location:
Size:
134,738 employees, gross revenue EUR77 billion
Other setting(s):
2008

About

Abstract

This case illustrates the tension/balance that firms with complex and risky business models must consider in designing their internal controls. It describes the environment in which a derivatives trader engaged in massive directional positions on major European stocks and indexes without being detected for over a year. Although the case could be used to teach the basics of internal controls, it is likely to be more effective by eliciting a debate about how predictable the incident was, and whether or not there was anything fundamentally flawed about the company''s choices in terms of strategy, control systems and culture. It also provides an opportunity to discuss the challenges of dealing jointly with a market-wide crisis (subprime) and a company-level crisis.

Settings

Location:
Size:
134,738 employees, gross revenue EUR77 billion
Other setting(s):
2008

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