Screw the assignment!
Aug 4th, 2007 by Clare
**ADDED:
- UUM is famous, again, for the wrong reason. A link from here leads me to a news in The Star Online today! Now you be the judge.
- Check out my food blog for another homemade delicacy, only in Sibu!
The fall of Barings PLC. Bare who? Don’t ask me!
A group assignment was assigned for Financial Risk Management class and the topic is Using the Right Derivatives the Right Way for Risk Management. I was supposedl do the RISK part. I’ve been reading articles after articles and reports after reports on the collapse of Barings Bank to get the idea what actually happened. I still couldn’t get the gist of it after 3 hours of reading.
Why can’t the lecturer give something local, as in Malaysia’s stories of derivative debacles? Why do we have to do something about Procter & Gamble or Orange County or Metallgesellchaft AG (I cannot even pronounce that word, haha!) What do I actually gained from all the readings? Good question!
For my part - i.e. risk, for all I know is that Barings debacle best illustrates operational risk and legal risk. The collapse of Barings was due to the unauthorized and ultimately catastrophic activities of Nicholas Leeson, a clerk from its London office who was sent to manage the back-office accounting and settlement operations at its Singapore futures subsidiary, that went undetected as a consequence of a failure of management and other internal controls of the most basic kind.
Barings management failed to act accordingly to reports on various lacks and ignored/too slow to act on the warning signs that emerged from their Singapore futures subsidiary concerning Leeson’s activities. Hence the collapse of Berlin Wall Barings. It was mainly due to the failure of individuals to do their job properly and professionally, not a result from the complexity of the business itself.
Lesson to be learnt: Take immediate action whenever there are complaints instead of taking your sweet time doing something unimportant. Yes, I am relating this to how some a lot of Malaysian work carry their responsibility. Do not wait until disasters happen then only you kecoh satu kampung (make a lot of noises) to do something about it ala Malaysian. It would be too late then. Somehow, in Bolehland, that is a norm.
Pardon me, I was just putting some points here for my assignment for review later, in case I forgot. I really have no idea what I was rambling about here, seriously. Don’t slam me.
Have a nice weekend everyone! 
*Off to PC Fair*
Thanks for the link back. I’ve always known about the strict dress code in UUM but didn’t talk about it, since it’s not my uni. However, it’s really ridiculous if you think about it.
You are welcome. Good that you know about it…A LOT of people out there do not know yet
Don’t worry. Barring-like case will never happen in msia. Not the screwup part but the aftermath. As usual, there will be cover ups and excuses that those are really unavoidable. We are unique
Yupe. We are always unique. Only in Malaysia.
Very blur very blur!!! What is this Barring Co?? Is this that co selling ball berring??? He! He! Do post up ur PC fair outing! Have a nice day!@
Never mind the Barring part, I was just crapping, like usual…
You should check out the movie Rouge Trader starring Ewan McGregor as Nick Leeson. Ambitious, wide-boy Nick Leeson (Ewan McGregor) is determined to rise in the world and be more than a simple bank clerk. When his employers, Barings Bank, offer him the opportunity to go to Jakarta to sort out a problem that nobody else wants, he seizes the opportunity with both hands. In Jakarta he meets and marries Lisa (Anna Friel) and together they go to Singapore when the bank offers him the job of setting up their future options trading operation. To save money the bank allows Nick to operate both the floor trading and the back office facilities and force him to employ cheap, unskilled staff. His first year of trading is a big success and he makes large profits for the bank even though he has illegally broken trading rules and secretly covered up losses. Given more freedom, even more money and continuing unchecked, Nick starts to make losses and again attempts to trade out of them but this time he comes unstuck as his illegal trading generates even bigger losses. After the death of his unborn child Nick completely loses control and gambles without restraint with other people’s money leading inevitably to a complete financial meltdown and the bankruptcy of the bank