# Credit Suisse Faces Consequences for Ignoring Risks
The Federal Reserve has found Credit Suisse in violation of banking regulations for its negligence in assessing the risks associated with Archegos’ concentrated positions. From mid-2020 to early 2021, Archegos repeatedly exceeded Credit Suisse’s internal risk limits, yet the bank failed to address these identified risks despite multiple warnings from staff.
This failure to establish a functional risk-review program, define oversight roles, and maintain sufficient data-quality operations proved costly for Credit Suisse. When Archegos defaulted on its margin calls, the bank faced substantial losses amounting to billions of dollars.
UBS, another prominent financial institution, has remained tight-lipped about the situation, with a spokesperson declining to comment beyond a statement that outlined their commitment to resolving Credit Suisse’s legal and regulatory issues in the best interest of stakeholders.
It is clear that Credit Suisse must learn from this costly oversight and prioritize risk management to avoid such detrimental consequences in the future.
UBS Takes Action to Strengthen Oversight and Risk Management
In a significant move, UBS has committed to enhancing its oversight and risk management practices following the Archegos failure. As part of a consent order, UBS has agreed to develop a comprehensive plan that aims to bolster its existing framework.
An Emphasis on Remediation
To address the underlying issues that contributed to the Archegos failure, UBS will establish a dedicated remediation office under its board of directors. This office will be responsible for implementing measures that tackle the root causes and prevent similar incidents in the future.
Strengthening Oversight and Risk Management
Recognizing the need for robust oversight and risk management, UBS is committed to taking proactive measures in this regard. The company’s formal plan will outline specific steps aimed at strengthening these crucial areas within the organization.
By addressing the fundamental weaknesses that facilitated the Archegos failure, UBS is positioning itself for a more resilient and sustainable future.
