the warnings over kervial, SocGen dismissed the warnings claiming all traders would have similar amount of warnings over time, which finally resulted in a huge loss and crashed the reputation of the company. This show the organizational functions are weak. On the other hand, the security systems of SocGen were not efficient.
Kervial used the login information's of his colleague to conduct the fraud activities. This shows that the IT infrastructure is not well programmed from stop committing a crime or fraud.Another problem was the scheduled checking system was arried out by the company which made kervial to commit the fraud. The system did not have proper tracking of records. The monitoring system is also not good enough to identify the fraud. The risk management control was not good to overcome the loss.
The risk management team did not have backup plans, which resulted the company couldn't face the financial crisis. Alternative Course of Action Firstly, the bank has to make proper investigations over the warnings raised.The management system should be well structured in the means of communication and o take corrective actions against the mistakes done by the employees to overcome the fraud activities done, so that a heavy loss can be stopped from happening. If the trader goes beyond the trading limit he has to seek permission from two to three higher officials. Secondly, random and frequent checks should be implemented on the trading history of its traders.
If this would have been carried out the loss would not have gone out of control.The random checking information should not be revealed to the low level employees and to be maintained secretly. Third, the omputer systems should have the track of entry and deleted data. The security should be high for personal logins, like finger print technology instead of user info.
With this type of security unauthorized logins can be eliminated. Evaluating each course of action The first alternative course of action, that is maintaining a proper organizational structure, this would possibly have a good and effective output but it is a bit time consuming.A change in the operations would basically take some time to carry out. The second alternative course of action will have a good output as employees will ave this trade checks that will be carried out frequently and they would hesitate to do fraud activities. Frequent checks would take some production time of the employees.
The third alternative course of action would help in finding the fraud after the crime is committed. This involves cost for programming and maintaining the server. This involves a risk of the server being crashed. Implementing this program is a bit time consuming as the server has to be programmed.
Recommend the best course of action In our opinion recommend the three courses of actions, they are as follows: 1) By maintaining proper organizational structure we could stop the fraud activities before the situation goes bad. 2) By carrying out frequent trade entries made by the traders. 3) To be more sophisticated against the online fraud and other crimes then it needs more hands-on when it comes to identity theft and fraud problems. So we should develop advanced sophisticated programs to track the records.
Jerome Kervial confinement On January 2008 kervial handed himself to the police when societe generale found the loss of
