Memo From The Chairman To All Risk Management Staff

As another French rogue trader has been detained in connection with that big recent loss over at Caisse d'Epargne, we thought we'd re-run something first published after SocGen trader Jerome Kerviel became a household name in January.

Memo to all risk staff:

'Greetings from Davos! The weather over here is fine, if a little chilly, but the company is great. I even managed to get a full 18 holes in today - for the third day running!!

Anyway, word is seeping through here about a rogue trading scandal at one of those little Frenchie banks, and I thought it  might be sensible to send you a brief memo to suggest that it's probably worth us having a quick review of our risk procedures to make sure that all is well our end. It actually takes me back to 1995, when we found out what Nick Leeson had done with Barings - do you know that a review of our operations at that time actually revealed that we HAD an office in Singapore ?

So, could I please ask all risk managers to review the books of all our French traders (and the Italians, too, come to think of it - they always look somewhat shifty to me). And please go about this task thoroughly. Tell those traders that the usual excuse of them not understanding English just won't wash on this occasion.

I will be taking a keen personal interest in the results of this review. Your Head of Risk Management knows that I expect a full report on my desk by the time I return to the office after my winter break (off for some sunshine after Davos, returning in a couple of weeks).

I want to leave you with a brief word of thanks for your efforts last year. As you are aware, 2007 would have been a year of record profits if it wasn't for that silly mortgage trouble we seem to have got ourselves into (and I didn't even know that we did home loans). And I know that our stock price has been higher (your share options surely can't remain under water forever, can they ?), but things are looking up. We have fired a significant number of your colleagues (and there will be further rounds of restructuring to come), reined in general expenses and cutback on non-executive jollies.

So, we're in better shape now. And we're doing some opportunistic hiring too. It's great to report that we have made a number of fixed income hires recently - traders who were strangely let go by rival firms (and we only had to give them three-year bonus guarantees!). I also promise that we will do something about the Compliance situation this year - I am now convinced that having my secretary head up this function on a part-time basis probably wasn't one of my brightest ideas'.

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