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Learning From the Global Financial CrisisCreatively, Reliably, and Sustainably$
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Paul Shrivastava and Matt Statler

Print publication date: 2012

Print ISBN-13: 9780804770095

Published to Stanford Scholarship Online: June 2013

DOI: 10.11126/stanford/9780804770095.001.0001

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Failures of High Reliability in Finance

Failures of High Reliability in Finance

Chapter:
(p.167) 9 Failures of High Reliability in Finance
Source:
Learning From the Global Financial Crisis
Author(s):

Nathaniel I. Bush

Peter F. Martelli

Karlene H. Roberts

Publisher:
Stanford University Press
DOI:10.11126/stanford/9780804770095.003.0010

This chapter examines the deep organizational problems in the culture and tools of high finance that limit reliable performance only within a very narrow set of system conditions. It argues that overspecialization, control and conformity, insensitivity to unknown risks, and lack of flexibility in response contribute to systemic failures in the financial services industry. To prevent future systemic breakdowns, this chapter recommends process auditing, long-term-oriented reward systems, monitoring of quality, multiple perspectives on risk assessment and mitigation, redundancy in auditing systems, and training on high-reliability issues.

Keywords:   high finance, overspecialization, financial services, process auditing, risk

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