How Individual Firms Can Prevent A Leeson Incident From Happening To Research Paper

How Individual Firms Can Prevent A Leeson Incident From Happening To Them - look into Paper ExampleThis research paper tells that the collapse of Baring Bank was primarily due to genius rogue trader, named Nick Leeson, who was making fraudulent transactions. Leeson occupied a great deal of power in Barings Limited, as he was both the Chief Trader and Head of Settlements, which means that he could make any(prenominal) trades he wanted without any oversight the fox was in charge of the chicken coop, so to speak. What this essentially meant was that Leeson was able to cover up losses and report them as gains, because, as Head of Settlements, which was in charge of reporting trading losses and errors, he was able to be dishonest in this way. This was brought to the attention of the auditors, which express that this set-up provided great risk, but Barings did nothing to rectify it. In the end, it was this lack of governance that proved to be the reverse of the firm, as Leeson sing le-handedly brought the bank down. The Leeson affair was caused by a number of different factors. First, according to Hoch & Kunreuther, stinky decisions played a large part in fomenting the conditions under which the scandal occurred. One of the bad decisions was on the part of the managers, who looked the other way regarding Leeson because their emotions got in the way. The managers liked Leeson, as he initially was successful in trading, and the emotion of greed got in the way of closely scrutinizing him. Moreover, Leeson had very little experience in trading, and he had some personal bad debt that was not disclosed in his application for a trading license. alone of these should have been red flags, however, they were overlooked by the individuals in the hiring process and by the managers who could have prevented Leesons judicious trading, simply because Leeson was liked (Hoch & Kunreuther, 2001, p. 6) Hoch & Kunreuther (2001) also state that there were other reasons why there were so many an(prenominal) bad decisions that were made in the Leeson case. One of these is that the company relied too much on intuition. Another is that they were in too much of a rush they felt that they must capitalize on the Far eastern United States market as quickly as possible, without implementing the