Enter the Boardroom 76. Paul Pester - Hard & soft impact: economics, culture and detail in the boardroom
Jul 3, 2024
Paul Pester, a seasoned banking executive and former CEO of Virgin Money and TSB, dives into fascinating insights on board dynamics. He shares how the Virgin Money board's rotating chair structure added value, and discusses lessons learned during the 2008 banking crisis with Santander. Pester emphasizes the importance of non-executives grasping business operations and proactive risk management. He advocates for boards to shape company culture through strategic alignment and offers innovative ways to quantify brand impact. A treasure trove of wisdom for aspiring board members!
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Force Stress Tests On Customer Deposits
- Do force the board to debate deposit segmentation and realistic outflow assumptions during stress scenarios.
- Use those assumptions to challenge executive ILAP/ICAAP inputs, not to produce the detail yourself.
Migration Failure Caused By Cut Corners
- At TSB a migration failure occurred because an IT outsourcer cut testing corners and misled the board with misleading data.
- That behaviour led to major customer harm and a £200m damages settlement by the outsourcer.
Cultural Contracts Can Override Legal Ones
- Legal contracts don't guarantee behaviour because social and cultural contracts can drive people to cut corners.
- Boards must ask who benefits personally when things go wrong to surface hidden incentives.
