Statement of the Problem

Wellfleet Bank’s increasing demands attributable to its growth are outpacing its risk
management division’s capacity. The firm’s efficient risk management was known to have facilitated its
survival during the 2008 financial crisis however, as it continues to experience further growth which had
spurred more demand, such had threatened the entity’s historically key competitive advantage in the
area of risk governance.

In this case, specific problem statements Wellfleet Bank struggled with are enumerated below:

1. What type of risks does Wellfleet Bank face as a result of its strategy? Whether the Risk
management process still tenable with the growing business of Wellfleet and in handling
megadeals?
The Wellfleet Bank is exposed to a variety of risks as a result of its present strategy.
Through its corporate banking section, the bank has always planned to chase huge
transformative acquisitions. Wellfleet’s risk management function is a three-level hierarchy
system established primarily for signing off business credit applications based on individual
experience. Credit proposals are initially received by the lowest level which consists of senior
credit officers who signs off these requests so long as it is within their authority, those that
which exceeds their limit are passed to the middle level comprising regional credit officers which
in turn does the same to the Group Credit Committee (GCC), the group tasked in dealing with
the largest credit proposals. Despite the pros of the said function, it was susceptible to various
defects as well. Thus, the entity’s current credit application process was held in question
whether or not it is capable of supporting the growing demands of the business especially
dealing with large credit proposals given that such was time consuming due to the lengthy flow
time in the approval of requests especially megadeals.

DIRE NI SIYA UNDER I DISCUSS Lack of an independent risk management function.

Too much authority designated to the Group Credit Committee. In addition to the
defective risk management function, the GCC which inasmuch is primarily tasked in dealing
with the largest credit proosals, too much authority was designated to the said committee,
depriving other supervisory functions supposedly for the executive management.

Counterproductive risk analysis organization evidenced by too much

compartmentalization of risks. Inasmuch as Wellfleet consists of eight risk committees aside
from GCC (market, reputational, operational, compliance, country, and business risks
(consumer and corporate bank) who indeed covered most risks and thus guaranteed elaborate
analysis for each, such process might have enabled the committee to overlook the interaction

2. Determine whether Wellfleet Bank will approve the proposal of a credit application of $1
billion loan from Gatwick Gold Corporation (GGC).