Chain reaction

Alexander Campbell

The amplifying effect of reputational risk was on display again in May, with JP Morgan’s startling admission on May 10 that it had lost $2 billion to a misjudged credit derivatives hedging strategy. In itself, though a significant loss, this seems not to have reached business-endangering levels – as chief executive Jamie Dimon pointed out on a conference call that day, the bank still looks forward to around $4 billion after-tax profit.

But the bad news caused a drop in share prices that wiped $1

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