Equifax says cyber-attack may have affected 143 million in the US

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The bank management and operations experience operational risks in all facet of the business. The losses arise as result of the failed internal controls or process, systems and external events are classified as functioning threats. Under the seven operational risk projected by Basel II, the cyber-attack at Equifax would be categorized as an external fraud.  The third parties can have access to the business system creating unexpected material, financial and material loss. Hacking, forgery, Robbery, identity theft/ acquiring unauthorized information, and check fraud are common fraudulent activities from persons external to the firm. Consequently, the company led to the sale of shares worth $1.8 million in days by the John Gamble, the chief financial officer. The company reported lower profits during the following quarter. The targets in the periods were missed as credit bureau issued warning after the data breach. Resolution to the risk involved establishment of multiple layers of control.  The hackers breaking in into the system can be noticed before doing any harm.

Deutsche bank handed a hedge fund $6 billion on a fat finger error

The Deutsche Bank mistakenly paid out an estimated $6 billion dollars to hedge fund to the clients. The ‘fat finger error’ resulted from employee errors when entering data or information (Marino 1). A junior employee in the forex sale department was in charge as the boss was on holiday. However, the bank identified the error early enough. Deutsche managed to recover the amount the following working day. The Deutsche Bank case would fall on the Execution, Delivery, and Process management category under the Basel risk event types.  The investigations on earlier labor interest rigging led to a fine of 1.7 billion pounds by the United States and the United States regulators at the beginning of the year.  It led to intense scrutiny from the bank regulators such as US Federal Reserve, Financial Authority, European Central Bank watchdog.  The bank was projected to lose about 4.5 billion pounds in the third quarter of the financial year following the ‘fat finger event’ (Salmon 1). Earlier that week, the firm had already announced an executive shake-up.  Consequently, several of the executive managers will leave the firm following the loss.

Ikea Employee stole over $400,000 within a year

An employee working at the call enters at Baltimore area pleaded guilty of swindling an estimated $400,000 in less than a year. Working in IKEA, Samaroo would handle mail and phone calls and took advantage of the situation to allocate him refunds for the purchases given by the clients. The event falls under the internal fraud category of risk types.  The money was recovered and company resolved to improve on the internal control to detect and prevent fraud by the employees.

Fed fines Mega Bank $29 million for wide-ranging breaches

Investigations showed significant deficiencies in compliance controls and operational risk management. The federal government of United States imposed a 29 million dollars penalty on Taiwan-based Mega International Commercial Bank Co. Ltd for failing to improve its anti-money laundering and compliance controls (Hill 1). The Client, Product, and business practice risk classification study allowed the bank implement official business policies to benefit the clients and business.

Fatal Fire in Bangladesh Highlighted the dangers of facing Garment employees

A fire in a textile factory in Dhaka Bangladesh left at least110 people dead and many others were left nursing serious injuries.  The second largest clothing exporter has several cases of fire indicating a poor safety record. In the last 12 years, there are over 500 workers’ deaths.  Other than death, the fire caused serious damage to the building, machines and production material. (Vikas1).  Operations were halted immediately but resumed months later. The company toughened the regulation and threatened to terminate contracts with non-compliant suppliers. The factories in Bangladesh and other parts of the world would undergo a building and electrical safety assessment.

Tesla Workers Allegedly Faced Racial Discrimination and Harassment By Coworkers and Supervisors

Three African-Americans filed a case in court claiming racial discrimination at their workplace. The former employees claimed that supervisors and coworkers at Tesla Company were racially abused verbally and graffiti drawings around the company walls. Employment practice and workplace safety risk management require equal treatment for all employees.  The case is still in court but the news of workplace discrimination risk damaging the company’s.

HSBC suffers IT outage

One of the biggest banks in the world suffered an information technology outage that caused online disruption. The customers with Banking for Business Accounts were left stranded due to the online banking failure. The management indicated that a downtime in such big financial statement could reach up to $ 143, 453 losses (Information Age 1). The company resolved to modernize the application and websites in the complex legacy systems. There was the need to establish a system to help in monitoring anomalies and identify issues causing poor performance in the digital money transfer.

Management Control: Enron

In 2001, Enron, an American energy company in Texas went into bankruptcy due to fraud. The executives used accounting loopholes to create special purpose entities. The financial statements produced the false position of the business after the company experienced increased debts and failed projects and deals. The chief financial officer under pressure from the executive misleads the board of directors and the audit committee about the operational risk. The publishing of the news led to falling share prices and eventual bankruptcy of the firm. Many members of the executive team were charged and some are still facing prison charges of internal fraud (Clinton et al. 1).

Works Cited

Bajaj Vikas. Fatal Fire in Bangladesh Highlighted the dangers of facing Garment employees. Nov 25 2012. November 2008. Accessed on January 28, 2018

Clinton et al. Management Controls: The Organizational Fraud Triangle Of Leadership, Culture, And Control In Enron. August 2007. https://iveybusinessjournal.com/publication/management-controls-the-organizational-fraud-triangle-of-leadership-culture-and-control-in-enron/ Accessed on January 28, 2018

Hill Jon. Fed fines Mega Bank $29 million for wide-ranging breaches. https://www.law360.com/articles/1003120/mega-bank-fined-29m-for-anti-money-laundering-violations. November 2008. Accessed on January 28, 2018

Information Age. HSBC suffers IT outage. 17 February

http://www.information-age.com/hsbc-suffers-it-outage-123464725/. Accessed on January 28, 2018

Marino Jonathan. Deutsche Bank handed a hedge fund $6 billion on a 'fat finger' error. Business Insider, Oct 2015. http://www.businessinsider.com/deutsche-bank-fat-finger-fx-trade-2015-10?IR=T Accessed January 28, 2018

Marco Meg. Ikea Employee stole over $400,000 within a year

https://consumerist.com/2008/11/21/ikea-employee-steals-400000-in-less-than-a-year/ 21 November 2008. Accessed on January 28, 2018

Tara Siegel Bernard, Tiffany Hsu, Nicole Perlroth, And Ron Lieber.Equifax Says Cyberattack May Have Affected 143 Million In The U.S. Sept. 7, 2017. https://www.nytimes.com/2017/09/07/business/equifax-cyberattack.html Accessed January 28, 2018

Westbrook T. Justine. Tesla Workers Allegedly Faced Racial Discrimination And Harassment By Coworkers and Supervisors. 17 Oct 2017. https://jalopnik.com/tesla-workers-allegedly-faced-racial-discrimination-and-1819633991. Accessed on January 28, 2018

January 19, 2024


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