Follow me on Twitter @UnreasonableEli to receive an unreasonable thought a day


« Damage Control »

I once tried to hire Jamie Dimon.

He was—and still is—one of the brightest stars in banking. At the time I was pursuing Dimon to succeed me as CEO of SunAmerica, he was the understudy to Sandy Weil at Citi. Dimon had high ambitions, but I couldn't convince him to jump ship to head our retirement savings company. Years later, I made the right decision to appoint Jay Wintrob as my successor.

Dimon has been in the news a lot this week because of J.P. Morgan Chase's $2 billion trading loss that resulted from using credit derivatives to hedge the company's risk. Dimon is known as a skilled risk manager, meaning he keeps an eye on the downside at all times. The loss is big, and will have consequences for the company. I write in my book, “The Art of Being Unreasonable,” that risk is necessary in business, but you should never bet the farm. While J.P. Morgan’s loss is significant, it’s a fraction of the company’s earnings. They didn’t bet the farm, or even half the farm.

If a great bank with great management can lose $2 billion, despite all the regulation enacted since 2008, mistakes like this could still happen anywhere. And that would not be good. I’m generally not a proponent of increased government regulation, but I predict the federal government will likely step in to do some damage control by limiting how much risk banks can take on.

Mistakes happen in business. What counts, though, is how executives react. Dimon has done exactly the right thing. He quickly took to the airwaves and admitted the company's mistake, accepted responsibility and took swift action. Those are the keys to damage control.

EmailEmail Article to Friend

References (5)

References allow you to track sources for this article, as well as articles that were written in response to this article.
  • Response
    Response: writing service
    $2 billion is not that small amount to lose but as far as I know it is not that big deal for such huge companies. These kinds of mistakes are not negotiable in the business that leads you toward this kind of loss.
  • Response
    Response: jmu
  • Response
  • Response
  • Response
    Response: 10 bests casino
    I found a great...

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>