JP Morgan loss highlights lack of risk experts on bank committees

JP Morgan’s recent trading loss has drawn attention to a lack of relevant experience on the bank’s three-person risk committee. Other dealers fare better, but of 73 risk committee members at 15 big dealers, only four have held senior risk management roles. By Lukas Becker

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While studying tables compiled by Risk on the make-up of bank risk committees (see table A, below), a former chief risk officer (CRO) stops at one institution and gasps. “That can’t be the risk committee,” he says. Then, after a nervous laugh: “Are you sure? You’re not missing a couple of people? That’s extraordinary. It’s just completely extraordinary. I’m speechless.”

The bank was JP Morgan, which announced a $2 billion derivatives trading loss in its chief investment office (CIO) on May 10

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