It seemed at first that the news agencies were recycling old stories when reports broke of a major fraud case at UBS. Not so. It’s a new case that has come to light. But while most may find the the volume involved grabbing their attention – $2bn is not exactly small change – the more interesting aspect lies in the apparent failure of the internal control and audit processes. The BBC website today carried a report saying that the alleged offender actually reported his illegal activities himself.
Now, everything about this story must currently be regarded as speculation including any conclusions we may like to draw from what has been reported.
But should the reports prove to be true, it must surely be seen as another indication that companies are not paying enough attention to processes or rather that behind the process facade their building contains few and only crumbling structures.
How can it be that a process using a regular transaction platform is not tied into the audit and control processes in a way that these processes actually perform? This question may not be all that difficult to answer. Could it just be another case of isolated process silo thinking coupled with a lack of responsibility? I know I made fun of this in my last post “BPM: Take me to your leader“, but that was three days ago when I had no idea that the UBS case might just be another example of paying lipservice to the process vision while having no real idea what processes are all about.
Whatever the defects in the actual audit and control processes at UBS, the even more pressing problem is that the interaction between the controller and the controllee seems to have failed. So the very real question is: How did UBS validate its processes before putting them into practice? Did the validate them at all? Or did they look at the process models and like the colors they were drawn in? Did they even look at how one process affects the next? Looking at the result (remember, this is still all speculation at the moment), it’s hard to imagine that any meaningful process testing has ever taken place. Hardly surprising when the dominant attitude is ‘seen to be doing something’ rather then ‘doing the right thing because we understand the need’.
So, it all this going to hurt UBS? The most damming answer may have come from an unlikely source: “Moody’s said that although UBS was strong enough financially to absorb the loss, it had concerns about its risk controls. We have continued to express concerns with regards to the ability of management to develop a robust risk culture and effective control framework,” the agency said.
In other words: UBS will survive (which is good) but lacks the ability to change (which is not good).
Would you now like to reconsider the importance of process quality testing? If so, visit the Process TestLab and let us discuss how we can help you.
