The collapse of Barings’ Bank was a commercial catastrophe that resonated worldwide, showing what kind of secrets can lie behind an apparently successful organization. Following Nick Leeson’s arrest and subsequent conviction for fraud, investment banks anxiously reviewed their risk management controls to make sure that it could never happen again.
Helga Drummond’s exploration is conducted against a backdrop of social and psychological theories of decision error that seeks to go beyond media style accusations of greed and incompetence. She challenges the myth that Barings ‘must have known’ that mischief was afoot. The book offers lessons for all organizations as it shows how easily managers can end up living in a world of fantasy believing that everything is under control when the precise opposite may be true. It is not risk and uncertainty that should worry organizations, concludes Drummond, but what they are most sure of.
The collapse of Barings Bank had international ramifications, and this scholarly analysis will have an international audience as a result. The book will be of great interest to all those interested in social psychology, the application of psychology in management theory, sociology, and organizational behaviour. It is also suitable as recommended reading for a management or organization behaviour course.
"Her sast chapter's fascinating water analogy nicely summarizes the issues, and her final sentence may well generalize the background of the current financial crisis … well worth reading." -- CHOICE September 2008, Vol. 46 (J. Prager, New York University)
1. The Paradox of Consequences 2. ‘A Third Rate Pisspot Bank’ 3. Failing Most Successfully 4. The Dynamics of Power 5. Did Nick Leeson Have an Accomplice? 6. Analysing the Fatal Disconnect 7. Agency, Structure and Organizational Collapse 8. From Order Filler to Star Trader 9. Analysis of Leeson’s Early Days 10. Decision Error 11. ‘A Million Bucks a Day’ 12. Analysis of the Final Weeks 13. The Illusion of Control 14. The Last Line of Defence 15. Analysing the Illusion of Control 16. Summary and Conclusions