Risk Management at Wellfleet Bank All That Glitters Is Not Gold Case Solution

Case Solution

Inspired by one of the handful of banks that effectively suffered the 2007-2009 credit crisis, the case demonstrates risk management within the arena of corporate lending. Leader Alastair Dawes must determine whether the risk governance process will uncover mega-risks, based on experience round the risk assessment and sanctioning from the $1 billion credit proposal. Students are requested to judge and assess the risks inside the proposal, produced by the bank's sales organization regarding a substantial gold-mining company, and also to achieve an option (whether Well fleet should accept it or else). Concurrently, students will be taught that gray-area risk options and, particularly, risk-modified performance measurement can rarely be automated. Risk governance requires professionals to strike an equilibrium between risk modeling and qualitative business judgment-an all-natural (rather than silo-based) take a look at risks.

Excel Calculations

 Economic Loss (EL) ($)

 Total Revenue

 Risk Adjsuted Revenue

 Economic Revenue

Questions Covered

1- Given its strategy, what kind of risks does Wellfleet face?
2- Given the Wellfleet’s new focus on large corporate deals and its need to recruit relationship managers from investment banks, what are the challenges for the risks culture of the organization, and its style of the risk management in particular?
3- What is your decision regarding the proposal at hand?
4- Calculate the expected loss, Economic Revenue and Economic Profit for the proposal?
5- Analyze the risk management process at Wellfleet. What suggestions might you make to the CEO about the improving the process?