Barclays Bank Case Study

Outline at least one risk event that the bank has recently encountered despite its risk management initiative. How was the bank affected by this event? What has Barclays plc done to manage this event?

Despite Barclays Banks supposedly aiming at managing and deterring risk in the best possible way one must still understand that certain events arise where no matter what the risk management team does and how well developed the risk management infrastructure is, certain undesirable results and occurrences will happen.

As previously stated above the bank clearly defines its risk appetite and identifies all possible risk and ways of managing them, ranging from operational and credit risk (the most popular) to reputation risk.

We will clearly analyse 2 events which occurred recently in which Barclay’s was involved. One mutual victim of these 2 events was Barclay’s reputation.

1. The LIBOR scandal

2. Theft of Customer files from Barclay’s Databases.

Reputation risk according to the FED:

Reputation risk is the potential that negative publicity regarding an institution's business practices, whether true or not, will cause a decline in the customer base, costly litigation, or revenue reductions. (SR 95-51) http://www.federalreserve.gov/bankinforeg/topics/legal_risk.htm 1. The LIBOR Scandal.

What is the LIBOR – London Interbank Offerring rate?

This is the rate at which banks borrow money from each other, hence it is the rate upon which most financial transactions are based. For these reasons it is considered to be extremely important and an indicator of overall financial health and trust in the system.

The LIBOR is set by calculating an average of the middle quartiles of the rates that leading banks submit for a no. of currenci...

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...fy and prosecute the perpetrator local regulators are also looking into what Barclays failed to do to protect such data. Any shortcomings resulting into fines of up to 500,000 GBP.

As a result Barclays has and as expected will continuously look into its IT infrastructure and ensure that data is kept safe and is not easily accessible to fraudsters. Furthermore it has also developed guidelines for customer to avoid customers themselves being fooled into giving their own private data.

https://www.creditmanager.barclays.co.uk/Content.aspx?content=faqs

Further updated information on what Barclays Bank itself does to protect the data can be found in the Privacy Policy and Security Section of its website.

Security: http://www.barclays.co.uk/Helpsupport/Security/P1242557966927 Privacy Policy:

http://www.barclays.co.uk/ImportantInformation/Privacypolicy/P1242557966945