Francois Brochet
Harvard Business School (110030-PDF-ENG)
October 02, 2009
This case illustrates the tension / balance that organizations with complex and risky business models must consider when designing their internal controls. It describes the environment in which a derivatives trader took massive directional positions on major European stocks and indices without being detected for more than a year. While the case could be used to convey the basics of internal controls, it is likely to be more effective if a debate arises about how predictable the incident was and whether the company’s decisions regarding strategy were fundamentally flawed. Control systems and culture. It also provides an opportunity to discuss the challenges of jointly facing a market crisis (subprime) and a crisis at the company level.
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