Ref: IMD-7-2363

Case study

Reference: IMD-7-2363

Order this case study


Credit Suisse: Lackadaisical about risk

Didier Cossin

By Professor Didier CossinDidier Cossin and Mopesola Ogunsulire

When Archegos, a low-profile family office, lost money on its holding of ViacomCBS shares in March 2021, it faced margin calls it could not meet, forcing it to unwind its positions. Banks with $50 billion credit exposure to the firm scrambled to sell off about $20 billion of Archegos’s investments to cover the calls. One of the firm’s biggest creditors, Credit Suisse (CS), eventually booked the largest loss; $5.5 billion after making just $17.5 million in fees from Archegos the year before. A report commissioned to examine the causes of the scandal blamed the repeated failure to manage and mitigate the risks on a) a “lackadaisical” attitude towards risk and risk discipline; b) a lack of accountability for risk failures; c) business and risk staff who “systematically” ignored acute risks identified by their own systems, and d) a culture reluctant to undertake challenging discussions or escalate matters that posed significant financial and reputational risk to the bank.

Learning Objective

  • Sensitise board members to potentially huge damage that can come from failures in risk management and governance.
Keywords Archegos, Credit Loss, Finance, Margin, Prime Brokerage, Risk Management
Settings Europe, Switzerland
Credit Suisse, Banking
2005-2012
Type Published Sources
Copyright ©IMD 2022
Language English
Order this case study

Reference: IMD-7-2363

IMD case studies are distributed through case clearing houses. In order to browse the collection and purchase copies please visit the links below.

The Case Centre, UK Office

Cranfield University

Wharley End Beds MK43 0JR, UK
Tel +44 (0)1234 750903
Fax +44 (0)1234 751125
Email [email protected]

The Case Centre, US office

Babson College

Babson Park, Wellesley MA 02457, USA
Tel +1 781 239 5884
Fax +1 781 239 5885
Email [email protected]

Harvard Business School Publishing

60 Harvard Way, Boston MA 02163, USA
Tel (800) 545-7685 Tel (617)-783-7600
Fax (617) 783-7666
Email [email protected]

Asia Pacific Case Center

NUCB Business School

1-3-1 Nishiki Naka
Nagoya Aichi, Japan 460-0003
Tel +81 52 20 38 111
Email [email protected]

Copyright information

IMD retains all proprietary interests in its case studies and notes. Without prior written permission, IMD cases and notes may not be reproduced, used, translated, included in books or other publications, distributed in any form or by any means, stored in a database or in other retrieval systems. For additional copyright information related to case studies, please contact Case Services.

Contact

Case study

Reference: IMD-7-2363

Order this case study
Looking for something specific?

Keep reading