Sim Segal, director of the M.S. in Enterprise Risk Management program, was quoted in the Global Association of Risk Professionals (GARP)’s April 14 article “Silicon Valley Bank: The Postmortems Came Fast and Furious.” GARP is a professional association for risk managers committed to the advancement of the profession through education, research, and the promotion of best practices.The article was published following the collapse of Silicon Valley Bank, the largest bank failure since the 2008 financial crisis, and outlines some of the factors that contributed to the failure. In addition to teaching, Segal is president and founder of SimErgy Consulting, a firm that helps organizations implement or advance enterprise risk management programs.
The article describes the managerial failings, warning signs, and institutional gaps that surround the collapse of Silicon Valley Bank. Various experts comment on how the failure could have been predicted, the external pressures that contributed to the collapse, and how the absence of risk management leadership compounded the fundamental issues of the bank.
Segal is quoted in the article saying, “If there was a proper ERM framework in place, then the processes—risk identification, risk quantification, risk-reward decision-making, and risk messaging—could have been continuing with another associate stepping in, such as a deputy CRO,” in reference to the failed bank’s lack of a chief risk officer for much of 2022.
“Basic business practices should have made SVB concerned about their reliance on a single sector,” he maintained. “Well before regulators cautioned SVB, their ERM program appears to have failed to prevent SVB from accepting a risk exposure that should have raised alarm based on routine risk scenario analysis. This could be due to suboptimal ERM processes, although it could be governance issues—not following ERM recommendations.”
Read the full GARP article here
About the Program
The Master of Science in Enterprise Risk Management (ERM) program at Columbia University prepares graduates to inform better risk-reward decisions by providing a complete, robust, and integrated picture of both upside and downside volatility across an entire enterprise.