External reactive detection v. internal proactive prevention

Purpose - All members of staff up to the Chairman of the Board now get daily briefings of the serious issues within the financial sector. Headlines are commonly quoting regulatory fines, once in the thousands and now in the millions. Errors or poor working practice have resulted in fundamental issues which need to be addressed; however, pressure often results in immediate solutions being required to address those visible problems without setting in place necessary changes to business developments and working practice. This paper aims to suggest that, through excessive external pressure, the solutions are less effective if not integrated with existing procedures and therefore failing to embrace the whole business model and its operations. Design/methodology/approach - The study uses case analysis and field work. Findings - Internal business controls are fundamentally important to the process of risk mitigation and established over many years. Any changes made to address deficiencies must be integral to both existing policies and procedures and IT systems to ensure permanent and positive improvement rather than potential ebb and flow associated with isolated reactive solutions. Research limitations/implications - Information regarding the case study information comes only from public sources, mainly written media reports, and is not confirmed by any confidential data known to the author. Originality/value - Using case analysis and field work, this paper suggests that any changes made to address deficiencies in a company are less effective if not integrated with existing procedures and therefore failing to embrace the whole business model and its operations.