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SVB and Credit Suisse Both Failed on Strategic Risks

SVB and Credit Suisse Both Failed on Strategic Risks

by Starling Insights

Starling Insights Editorial Board

May 22, 2023

Observations

Pricing Non-Financial Risk Culture & Consequences Culture & Performance Toxic Culture The Costs of Misconduct

In a recent Financial Times article, Evgueni Ivantsov, Chairman of the European Risk Management Council, argued that, while the collapses of Silicon Valley Bank (SVB) and Credit Suisse appear to be very different on the surface, the root cause for each was toxic culture and mismanagement of strategic risk.

SVB transformed its business strategy to capitalize on the influx of cash to tech startups, repositioning itself as an investment firm and channeling interest-free deposits into securities investments. These steps led to a portfolio overexposed to interest rate risk, ultimately spelling disaster when interest rates rose.

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