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Why cultures fail: The power and risk of Groupthink

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  • Valine, Yousef A.

Abstract

Why do terrible things happen under the watch of good leaders? Why do very smart, dedicated, well-meaning leaders make horrific mistakes? Can these problems be foreseen? How and why do these problems happen? How is it that a robust system of checks and balances designed to prevent these situations fails? Are these problems likely to happen again? In this paper, the power and risk of Groupthink is explored by examining two cases (London Whale and Sales Practices) at JPMorgan Chase and Wells Fargo. Through specific examples, the paper demonstrates that what happened at these organisations can happen in any company.

Suggested Citation

  • Valine, Yousef A., 2018. "Why cultures fail: The power and risk of Groupthink," Journal of Risk Management in Financial Institutions, Henry Stewart Publications, vol. 11(4), pages 301-307, September.
    • Handle: RePEc:aza:rmfi00:y:2018:v:11:i:4:p:301-307
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    More about this item

    Keywords

    conduct risk; Groupthink; London Whale; Sales Practices; culture failure; cognitive biases;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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