Compensation policy in the financial industry has been much scrutinized over the past couple of months. The Group of 20 has recently reached an agreement on regulating banker bonuses.

Profit sharing and incentives are key issues, but the major issue is to first understand what kind of value is added. GDP and profit are not risk-adjusted measures.

Understanding the role of banks in transforming risk and encouraging economic growth is essential before addressing errors and excesses; regulation and management then may have to model risk and risk-taking with new kinds of measures.


Another issue in this crisis: counterparty risk assessment. Since rating and KYC (Know Your Customer) have been called into question, these procedures have recently been reinforced.

Deciding between external and in-house rating (or both) is part of the risk management governance of any company, financial and non-financial.

Setting up incentives and assessing risks are services we offer because we believe these to be essential to sustained growth.

Fayna Lionet
OTC Conseil Americas

Trader compensation was part of last month's G20 agenda. The central question was: What kind of compensation doesn't encourage excessive risk-taking?

If the recent bankruptcies of Lehmann Brothers and General Motors are evidence of the severity of the current economic climate, they are also signs of a new vulnerability against which few companies are immune.