As the world’s economies grow and form ever stronger links, the world’s financial institutions will increase in size, sophistication, complexity and integration. Therefore, we should be prepared for more highly-publicized shortcoming of people and institutions that will inevitably be uncovered from time-to-time. Bigger institutions will result in bigger problems being exposed. There will be potential for some to be wide-spread as were the United States financial crises centered on collapsing real estate values which also reverberated throughout the world or the current European debt crisis that is creating uncertainties that depress economies around the globe. More contained and institution-specific problems such as the incidents recently disclosed at Barclays and JP Morgan Chase will also get much attention because of the magnitudes involved and the intense media coverage.
[This article republished with permission from the author and the Tuck School of Business.]