What's happening at JP Morgan Chase?

Recently, many have come forward to ask me what is going on within JP Morgan Chase's risk management division. Over the past year, a number of people have left the operational risk team, both at the corporate and business unit levels. Risk executives in other disciplines have also moved on, while apparently some risk management team members at the corporate level have been reshuffled into business unit posts. The firm hasn't had a chief risk officer since late 2006. And executives at other firms say they are getting lots of JPMC risk management CVs in their inboxes.

A source close to the firm also tells me that JPMC no longer uses pure economic capital calculations to determine the capital business units hold - the source says a less complex form of the calculation is done and the results are then sent up to the chief executive's office, where they are "adjusted".

And it is at the door of the CEO's office that accusing fingers are pointed. Chairman and CEO Jamie Dimon has made changes to JP Morgan Chase since he took the helm, and many of them have not been widely applauded. On top of this, his disengagement from JP Morgan Chase's long association with the Washington DC-based Institute for International Finance has struck many as symptomatic of the wider issue - Dimon is accused of not thinking broadly enough about risk management, and its role in the development of financial services as well as in global financial stability. All he is concerned about, say his detractors, is his bottom line.

Dimon's critics might be unfair. Given the current turbulent period, his careful eye on the bottom line seems prudent. But JP Morgan Chase has long been viewed within financial services as one of the world's top think tanks on risk management issues, and a best practice benchmark. Now, whatever Dimon's intentions, the market sees the firm shifting away from this role. Allowing this drift to continue would be a big mistake - not just for the firm but for the discipline of risk management.

Dimon needs to communicate what his vision for the evolution of risk management is over the next decade, and how his changes support that view. Now, more than ever, is a time for supporting risk management - it holds answers we will need to understand the rapidly shifting world around us.

Ellen Davis, Editor