This Week in GRC: March 17
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Welcome to the first edition of MBK's Week in GRC, a weekly digest of the latest news, views, and commentary from the world of governance, risk and compliance.
The Banking Sector's Decade of a Week
Last Friday's news of Silicon Valley Bank's demise sent shockwaves through the banking sector unseen since the collapse of Lehman Brothers in 2008.
As the week unfolded, Signature Bank also failed, the Swiss central bank gave Credit Suisse a liquidity top-up, and a swathe of banks made a $30b deposit into First Republic.
"There are decades where nothing happens, and there are weeks where decades happen," said Vladimir Ilyich Lenin. And as The Fed weighs up tightening requirements on mid-size banks, that 'decade' may end up being very long indeed.
There's much to sift through, so here are some of the best takes on what's happened over the past seven days.
GRC hiring will increase in light of SVB - MBK
Silicon Valley Bank's failure will usher in an increase in risk and compliance hires, predicts MBK's CEO Spencer Knibbe .
"In the short term, the banking sector is getting battered, and it will need to hire and beef up their risk and compliance teams because they have to. This is a good hiring opportunity for banks to secure junior to mid-level talent and bolster their senior ranks."
Don't throw out the SVB model yet
The SVB model isn't broken, but it does need refinement argues fintech leader Josh Oliveira ????
Josh also wrote this take on LinkedIn, summing up the tale of the tape the led to SVB's fall.
SVB and the case of the missing Chief Risk Officer.
"Most of the writing on the fall of SVB has concentrated on its business strategy rather than its corporate governance," writes Patrick Healy , who produced this excellent summary of Nongaap Investing's look at SVB's lack of a CRO.
"A generous interpretation of all of these facts might say that they were being very choosy about a new CRO, that the extra Risk Committee meetings were to cover for the CRO’s absence and that the share sales and the settlement were all part of the high-rolling start-up, high finance and tech worlds. How generous do you feel?"
The full Nongaap article is also well worth your time.
When is a bank not a bank?
A pertinent question posed by Garry Honey
"Was SVB really a bank in the sense that we understand a bank? It collected deposits and invested them, but it proved a very poor investment manager as it ultimately destroyed value as opposed to create it. Was this accidental or fraudulent?"
Was SVB's remote-first culture to blame?
An interesting angle with wide implications was mooted by The FT, suggesting a link between SVB's remote-first culture and a lack of oversight.
"'It is harder to have a challenging call over Zoom. It makes it harder to challenge management,' said Nicholas Bloom, a professor at Stanford University who has studied remote working extensively. 'Ideas like hedging interest rate risk often come up over lunch or in small meetings'."
With many in the banking sector pushing a strong return-to-the-office policy, questions arise as to whether SVB will be ultima facie for making that happen. But costs associated with wholesale onsite hiring shouldn't be taken lightly either. And the want for remote and flexible work isn't going away anytime soon.
Will risk management be top of book for the tech industry?
Silicon Valley Bank had a certain cache with the tech scene (hence the name). But does the bank's demise mean the industry will sure-up its risk and compliance stocks?
This excellent piece from Morning Brew explores the CA tech scene's SVB-flavored wakeup call.
We expect hiring in GRC roles to jump in light of the past week's events. Here are some of the big roles we're recruiting for.