Was management behaviour and the incentive structures for traders also to blame?
Yes. Innovation was encouraged to create products where fat fees could be added. There was a lot of greed. The bonuses were based on short-term incentives and they should be long-term. It was all based on the next quarter. Should they have shunned complex financial products? Yes. When you are in business, you should understand your business. That is a basic requirement. I am a Non-Executive Director of some companies and understanding and managing risk can be extremely difficult. Unfortunately, you don’t always know the scale of a particular risk until afterwards. But the key is at least to make an effort to understand what the risks are. The finance sector made the wrong assumption that markets not only are best at allocating capital, but that the same markets could also better manage and absorb risks than institutions. Would things have been different if women had been more prominent on the executive committees and boards of the major banks? Yes I think so. Women are more afraid than
