Barclays Bank’s Decision-Making & Risk Management

Introduction

The decision-making process in multinational financial structures is complex and multifaceted, including a number of steps and operations. The questions about what stages the decision-making process should include are rather controversial and solved differently according to the specific style of governance and the scope of the organization. Being one of the biggest and the oldest financial conglomerates in the world, Barclays devotes many efforts to the development of its decision-making strategy. While Barclays’ official documents do not define the steps that coincide with the academic framework of the decision-making process, the bank’s guidelines in this field seem progressive and aimed at its smooth functioning.

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The Barclays Lens decision-making framework

The core of Barclays’ strategy lies in the aspiration to remain the leading “Go-To” bank, the place where interests of all customers and stakeholders are taken into account and satisfied (“Annual Report 2014” 4). Within this framework, the issue of streamlined and effective decision-making process becomes crucial. For that aim, in 2013 the company reconsidered its purposes and values and established the Barclays Lens – the assessment tool within the Barclays Way framework that should be used by everyone when making a decision at any level.

The Barclays Lens is not the description of steps of the decision-making process but a set of rational guidelines that help to identify whether a decision is being made in the company’s spirit. This tool includes five questions: is the bank making a direct or indirect profit from delivering services to the customer; is the bank clear and transparent in its communication with the customers and stakeholders; is the created value a long-term one; is the created value beneficial for the bank, its customers and the society; is the decision right and moral and does it correspond with the bank’s values and purposes (“The Barclays Way” 18).

Risk management decision-making process

A better understanding of how decisions are made in Barclays can be seen in its risk management activities. The Enterprise Risk Management Framework provides three steps the management should follow. These steps are: Evaluate (identification and assessment of existing and potential risks), Respond (ensuring that “risks are kept within appetite” (“Annual Report 2014” 44); at this stage the activity can be either stopped because of the risk or continued with the risk eliminated or passed to another party) and Monitor (tracking the progress after taking required measures) (“Annual Report 2014” 44). Among the key risks during 2014, the reputation risk was the most notable one. According to the Financial Control Authority, Barclays Bank was the most complained bank in 2014; the bank paid 38 million pounds of penalty to its clients (Bachelor par. 3).

The problem of hierarchy

While the principles and philosophy of decision-making are rather up-to-date, the bank’s structure often creates complications for their implementation. For example, in the case of the abovementioned risk management process, the system of decision-making is quite hierarchical. The risk has to pass the “three lines of defence” represented by a number of structures and committees at different levels (“Annual Report 2014” 46). Barclays’ chairman John McFarlane noted that “the nature of the decision-making processes in the company…are actually quite cumbersome” and very often it is impossible to act quickly because “there is only one person in the room that is accountable for the decision” (Wallace par. 15).

Conclusion

Thus, it can be seen that Barclays Bank has a clear and progressive vision of the decision-making process, with risk management being the most elaborate one. To transform this vision into real results, the company should improve its organizational structure and make it less hierarchical.

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Works Cited

Annual Report 2014 2015. Web.

Bachelor, Lisa. Barclays is the Most Complained about Bank – FCA. 2014. Web.

The Barclays Way 2014. Web.

Wallace, Tim. Barclays Profits Climb as Investment Bank Makes Surprise Lurch to Health. 2015. Web.

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StudyCorgi. (2021, February 21). Barclays Bank’s Decision-Making & Risk Management. Retrieved from https://studycorgi.com/barclays-banks-decision-making-and-amp-risk-management/

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StudyCorgi. 2021. "Barclays Bank’s Decision-Making & Risk Management." February 21, 2021. https://studycorgi.com/barclays-banks-decision-making-and-amp-risk-management/.

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StudyCorgi. (2021) 'Barclays Bank’s Decision-Making & Risk Management'. 21 February.

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