Introduction

Patrick McConnell

STRATEGY IS IMPORTANT

In their joint analysis of the failure of the large UK bank Halifax/Bank of Scotland (HBOS), the UK banking regulators, the Prudential Regulatory Authority and Financial Conduct Authority (PRA/FCA 2015), concluded:

HBOS failed to establish a Group strategy, which was set in the context of clearly identified risks and measures to quantify and control these risks. As a result, fundamental weaknesses in HBOS’s strategy were never adequately identified or addressed [emphasis added].

In other words, the board and senior management of HBOS failed to identify and manage the considerable risks they were taking in pursuing the corporation’s “Growth” strategy. Unfortunately, as this book aims to demonstrate, HBOS was not alone in suffering catastrophic losses for shareholders and taxpayers as a result of deficient strategic risk management (SRM).

While the importance of strategy is enthusiastically endorsed by directors and senior executives of major companies, there is strangely little consensus on what “strategy” actually means. This is surprising, because there is a fairly mature “industry” around strategy, comprising educators, consultants and authors