Friday 12 April 2024

Why would Lloyds boast about culling risk controls?

Here's a very odd story, that we must surely assume comes from Lloyds itself. 

Lloyds cuts risk management roles in bid to ‘move at greater pace’ 

Bank’s risk assessment method blocking change, internal review concludes ... internal risk structures were acting as a “blocker” to change ... The changes will help the bank in “resetting our approach to risk and controls” and enable Lloyds to “move at greater pace”, according to an internal memo seen by the Financial Times. Mr Nunn [CEO] has been ramping up the pace of change at the bank after setting out a turnaround plan in February 2022.

Well.  First of all, whoever this Charlie Nunn is, waiting more than two years before "ramping up the pace of change" sounds to me like being asleep on the job: a classic "re-launch" so beloved of failing governments and managements of all kinds.  FFS, he became CEO in August 2021!  I'm no revolutionary, but the longest I ever waited in a new managerial job before making changes at pace was about 3 months, and that delay (for such it was) was for a very specific tactical reason.  Ordinarily, it's Machiavelli's dictum that should rule: make your big changes straight away.  Two years is, frankly, pathetic.  (And check Nunn's salary!)

Secondly, what sort of caricature BSD does he wish to be seen as, ostentatiously axing risk management posts?  I'm not really asleep at my desk, I'm a BSD!  Get out of the road, you risk managers!  We'd be making so much more money if it wasn't for you!  Yeah, right.  Two years.

Thirdly, properly construed, the one facet of financial** risk management that can only with difficulty be a positive contributor to doing good business, is credit risk management.  There's only ever bad news in credit: the best that can happen is that counterparty performs its side of the deal!  Which we kinda assumed in the first place, right?  And nobody ever pays you more than you billed them for, and says - hey, keep the change

Otherwise, financial risk management should be viewed as potentially a big positive contributor to doing good business.  It is good business you want to do, right?  Or is it a quick speculative buck: book the 'profits' today, grab the bonus and run away?  I start to wonder.

Finally, the joke is, "The shake-up will see 45 jobs removed from these risk teams, equivalent to around 1.5pc of the 3,600 people who work in risk jobs for Lloyds."  In other words, it's trivial, cheeseparing stuff anyway.  


(PS, I have never been a risk manager, in case you were wondering.  But I have worked with some brilliant ones.  Only in a dysfunctional organisation does RM stymie good business.)


** There are loads of non-financial risks that fall into the same baleful category: 'operational risk' (- the catchall for a lot of shit-that-can-happen); and reputational risk, political risk etc etc etc. 


dearieme said...

Maybe he thinks the Boeing example is one to emulate.

James Higham said...

That's a most interesting late move indeed.

AndrewZ said...

If the actual change is "trivial", then it sounds like a CEO trying to create the appearance of taking bold and radical action without actually doing so.

Anonymous said...


Diogenes said...

He's in the market for a new job, preferably away from the UK for the next five years. A bit of PR to say remember me.

Or he's just realised he has been told about a career threatening problem he hasn't addressed and can't do anything about now.

Watch the FT in the next few weeks.

Sobers said...

BSD = Big Swinging D*ck, presumably.

Matt said...

@ Diogenes

Surely not. With the amount of money they are paid, they need to be infallible. Mind you, look at all the tossers from The Post Office and Royal Mail who have claimed either:

1) They weren't aware of what was going on in the business (no one told me and I didn't bother to ask).
2) I can't remember anything that might be incriminating.

The idea that many of these C suite levels are anything other than pretty ordinary is fanciful. Sure, there will be a few examples where they lead from the front, but a lot of them are placemen.

Anonymous said...

My guesstimate is that BSD = large dangling male genitalia. Boss doing the equivalent of beating his chest and growling loudly "Me Boss!".

I see Grant Shapps is talking about sending new £10 a shot prototype Dragonfire laser drone killer to Ukraine btw.

"A brave decision, Minister"

Will the whole world have the Chinese version within two years?

Diogenes said...

The Post Office saga has deep routes which are worthwhile exploring. Some of the its legacy systems were not Fujitsu's but ICL (remember them). ICL was set up by a Wilson government with the aim of taking on the world with British IT. AFAIK the Horizon system was ICL though the BBC say it's all Fujitsu.

Fast forward to today, and you have ATOS in France where the French government tried to do the same for their industry. Driven by Thierry Breton, now with the EU, it's beginning to look sick. He left for the EU before it started its downward spiral and has washed his hands of blame.

So the moral is a) governments can't do IT or strategy and b) get a new job while you can. (Lots of MP's doing his now)

Nick Drew said...

@ get a new job while you can.

pragmatic risk management takes many forms ...

dearieme said...

"The idea that many of these C suite levels are anything other than pretty ordinary is fanciful. Sure, there will be a few examples where they lead from the front, but a lot of them are placemen."

The most distinguished "boss" I ever had was my undergraduate University Principal - Nobel Prize in Physics.

Two of the best bosses I had were

(i) the skipper of the trawler on which I worked in school summer holiday. I was at the helm when we lost a net and he simply said "My fault, son, you steered exactly the heading I told you to."

(ii) The chap who ran a village pub/hotel where I worked as barman and dogsbody in a university long vacation. Ex Forces he was: excellent chap, especially having to deal with his father when the old boy got drunk and chased the waitresses around the kitchen.

AndrewZ said...


I'm impressed that the skipper entrusted you with such a high degree of responsibility. Did you already have a lot of experience with boats, or is that just part of trawler working culture that everybody is expected to take responsibility for whatever needs doing?

dearieme said...

My experience had been only in dinghies and motorboats. But the heading was dead easy: we were an inshore trawler so we navigated largely by landmarks.

Alas, a tide must have swept away the sand and mud overlying a rocky bottom and so goodbye to our net. Our word for a bit of rocky bottom was "scaur". I assume that like much of our vocabulary it was from the Norse.

(And googling shows that that may be true: "The association between sgòrs and concealed sea-rocks would make you wonder whether the word is connected to a skerry, an offshore rock. This comes from the Norse word sker, which is closely related to the Gaelic sgeir. According to Dwelly, this is much more narrowly defined as a 'rock in the sea nearly or quite covered by neap-tides and quite covered by spring-tides'. Alternative meanings are peat-bank; cliff; sharp, flinty rock ...")

Anonymous said...

See also Sker Point in Glamorgan, where the Mumbles lifeboat came to grief.

electro-kevin said...

There is a bit of a panic feel to this post, which is unusual for you, Nick.

Too many wars.

All of them emanate from do-gooders such as Cameron.

British Lasers. Now WHERE did I get that one from ???

I'm extremely well connected.

Anomalous Cowshed said...

Lloyds is (was?) far more conservative than say, Barclays or NatWest; wild guess, it's the IT systems, somnething, something, AI (whatever underlying model), tokenisation, payments, fraud detection, CBDC, soemthing, rather than just credit management.