Why cultures fail: The power and risk of Groupthink

Yousef A. Valine

Journal of Risk Management in Financial Institutions, 2018, vol. 11, issue 4, 301-307

Abstract: Why do terrible things happen under the watch of good leaders? Why do very smart, dedicated, well-meaning leaders make horrific mistakes? Can these problems be foreseen? How and why do these problems happen? How is it that a robust system of checks and balances designed to prevent these situations fails? Are these problems likely to happen again? In this paper, the power and risk of Groupthink is explored by examining two cases (London Whale and Sales Practices) at JPMorgan Chase and Wells Fargo. Through specific examples, the paper demonstrates that what happened at these organisations can happen in any company.

Keywords: conduct risk; Groupthink; London Whale; Sales Practices; culture failure; cognitive biases (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2018:v:11:i:4:p:301-307

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