In the Nirav Modi case, a single rogue employee’s actions have threatened to wipe out more than a quarter of Punjab National Bank (PNB) shareholders’ equity. This incident follows other similar international scandals in which Nick Leeson brought down Barings Bank, and Hamanaka caused significant losses to Sumitomo, both in 1995. This brings up the question whether such occurrences can be prevented or at least minimised with a long-term solution rather than simply a quick fix.
Enterprise Risk Management (ERM) is designed to minimise the likelihood of such occurrences. The state of the art is to use ERM for risk management and the three-lines-of-defence model for risk governance. Worldwide, financial institutions such as banks and insurance companies have implemented risk…
