Prevent the Risks of the Bad Guys

Some community banks are considered to be going far in formalizing their operational risk management processes, including those whose managers recognize this is what they should be doing matter.

“We’re going to eat the kick it’s stuck in as we continue to grow,” said Glenn L. Wilson, president and CEO of Citizens Banking Corporation, the $1.3 billion commercial unit of Bankshares, Inc. "We rely on the people to stay here longer and keep an eye on things."

Community Bank Executive Officers may be tempted to say that they don't have the same need for career risk management, especially for operational risk management, at large banks because they are unlikely to be involved in the kind of complex transactions that bankers under Enron do for example. But even if community banks shy away from unusually structured transactions, criminals are becoming increasingly sophisticated, Mr. Wilson said, listing check fraud, ATM fraud, and credit card fraud in the face of worries about banks.

In addition, Hartigan said, bankers "must also be aware of the forces that influence the financial and banking industries."

For example, community banks share the same understanding and efforts to curb identity theft. Because big banks, he said, also have to recognize the risks posed by electronic transactions that didn't exist just a few years ago, if only because customers often have little idea what they're doing anymore. Few rural areas are immune to the types of scams and scams that are aided and abetted by the Internet and electronic capabilities," Hartigan said.

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