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The Risk Management Function in the Financial Sector - How Independent are Chief Risk Officers in Swedish Banks?

Pålsson, Patricia LU and Helmersson, Maria LU (2012) FEKN90 20121
Department of Business Administration
Abstract
The purpose of this thesis is to measure the level of independence of the CRO function in the four major Swedish banks. A lacking independence of the CRO can impose negative outcomes on the organization, and an example of this is Swedish HQ Bank that fell victim to bankruptcy in 2010. One of the problems causing the bankruptcy was the lacking independence of the CRO.

By undertaking a deductive reasoning and a qualitative approach, the CROs of the four major Swedish banks have been interviewed. We have constructed a scoring system, based on the publication Principles for Enhancing Corporate Governance, published by the Basel Committee on Banking Supervision (BCBS). From this regulation we constructed seven criteria to measure the level... (More)
The purpose of this thesis is to measure the level of independence of the CRO function in the four major Swedish banks. A lacking independence of the CRO can impose negative outcomes on the organization, and an example of this is Swedish HQ Bank that fell victim to bankruptcy in 2010. One of the problems causing the bankruptcy was the lacking independence of the CRO.

By undertaking a deductive reasoning and a qualitative approach, the CROs of the four major Swedish banks have been interviewed. We have constructed a scoring system, based on the publication Principles for Enhancing Corporate Governance, published by the Basel Committee on Banking Supervision (BCBS). From this regulation we constructed seven criteria to measure the level of independence in each bank’s risk function.

The thesis covers theories around the relationship between risk and return to describe the built-in conflict in the financial sector. Further the centralized approach of ERM is reviewed. Window dressing around ERM is also discussed. Publications and guidelines by the BCBS as well as the Swedish “Finansinspektionen” is used as a theoretical ground.

The results of this research show that three out of the four Swedish major banks have an independent CRO function. The fourth bank could however not be concluded as independent. (Less)
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author
Pålsson, Patricia LU and Helmersson, Maria LU
supervisor
organization
course
FEKN90 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
CRO, Risk Management, Financial Sector, Independent, Basel Committee on Banking Supervision, Finansinspektionen, Chief Risk Officer, RM, BCBS, FI, Independency
language
English
id
2542178
date added to LUP
2012-07-02 12:23:39
date last changed
2012-07-02 12:23:39
@misc{2542178,
  abstract     = {The purpose of this thesis is to measure the level of independence of the CRO function in the four major Swedish banks. A lacking independence of the CRO can impose negative outcomes on the organization, and an example of this is Swedish HQ Bank that fell victim to bankruptcy in 2010. One of the problems causing the bankruptcy was the lacking independence of the CRO.

By undertaking a deductive reasoning and a qualitative approach, the CROs of the four major Swedish banks have been interviewed. We have constructed a scoring system, based on the publication Principles for Enhancing Corporate Governance, published by the Basel Committee on Banking Supervision (BCBS). From this regulation we constructed seven criteria to measure the level of independence in each bank’s risk function. 

The thesis covers theories around the relationship between risk and return to describe the built-in conflict in the financial sector. Further the centralized approach of ERM is reviewed. Window dressing around ERM is also discussed. Publications and guidelines by the BCBS as well as the Swedish “Finansinspektionen” is used as a theoretical ground. 

The results of this research show that three out of the four Swedish major banks have an independent CRO function. The fourth bank could however not be concluded as independent.},
  author       = {Pålsson, Patricia and Helmersson, Maria},
  keyword      = {CRO,Risk Management,Financial Sector,Independent,Basel Committee on Banking Supervision,Finansinspektionen,Chief Risk Officer,RM,BCBS,FI,Independency},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Risk Management Function in the Financial Sector - How Independent are Chief Risk Officers in Swedish Banks?},
  year         = {2012},
}