The "Infamous Five" loss events and why we love 'em.
Posted by Jim Wickenden on Fri, Mar 18, 2011 @ 08:14 PM
For days now I have waited expectantly for my monthly issue of Operational Risk & Regulation, conjuring up contented childhood memories when the Valiant and Lion comics would arrive. Wednesday morning, seven am and my internal clock would have me wide eyed in anticipation of the next installment and then I would hear the rattle of the letter box and the electrifying “phlumph” as they hit the mat. Oh joy, oh expectant, rapturous joy! Up I would spring, tossing aside my blankets and hurling my frame downstairs to gather up the latest editions of fantastical adventures. Did the Captain get out of the trap? Was it curtains for the hero this time? What fascinated us when we were ten about reading the next installment? Who was it we were drawn to among the tales of derring-do and expansive adventures? Oh sure the good looking guy to see if he escaped, but wasn’t the evil villain so much more magnetic with his rapacious appetite for wickedness?
No “phlumph” anymore as I make my way to the mailbox, but the thrill is still there when I see my OR&R curled, stuffed and peeking at me from inside. The cover always features a smiling, suited expert who never really looks comfortable in front of the camera just as any hero would: humbly stoic and square-shouldered to the cause, but I still open it backwards to get to the juicy bits, the second to last page. Those firms who have suffered the largest operational loss events of the month and the dastardly crimes perpetrated upon them…or by them? But surely it isn’t just me who is drawn to the “Infamous Five?” Big names with massive sums that always run into the millions if not billions: Citigroup, $126 million for the wickedly classic, “theft and fraud.” Banco PanAmericano, $1.47 billion for the mysterious “improper business or market practices.” Russian Agricultural Bank paid a $193.81 million entry fee into the aforementioned salacious but always malevolently enticing” theft and fraud” club.
I am not making light of these loss events (why is it the banking world never to refer to them as crimes?), but I am curious as to why we make such a big deal, every month, about displaying the details. It obviously happens every month, if not every day, month in, month out, day in, day out, so why the fascination? The answer has to be that Dr. Desperado and Colonel Corrupt of the fiscal underworld make the whole machinery tick over. No moustache twirling villain then no rosy-cheeked crusader in the white hat saving the international banking damsel in distress. No wiry miscreant darting in the shadows and no crusader of financial harmony to swoop down to thwart him. No libertine arrogantly swashbuckling his way through the day to day machinations of the humble financial institution means no operational risk management team employed to catch him in the act. The fact is that tales of greed and avarice make us want to be more than we are. Without them then Captain Compliance would never appear on the front cover, the damsel will never throw her arms around his neck in gratitude for preserving her virtue…and I wouldn’t bother getting out of bed on a Wednesday morning.