Did poor email management cost “French financial giant” $7 billion?
Societe Generale, France’s second largest bank, recently discovered that a rogue trader cost the bank at least $7 billion in U.S. Dollars. No, that is not a mistake. $7 billion dollars. Regarded as a fraud of historic proportions, this scheme will surely draw some attention to the bank’s internal procedures and monitoring of electronic communications. In other words, how could the bank let this happen? Was there an email management system in place? Did the trader ever contact anyone at the bank and let them know of his plan? According to an article by James Rogers of ByteandSwitch, the answer might be no. He reports that the “precise details of what happened at Societe Generale are yet to emerge, although intial media reports say that the alleged rogue trader acted alone.” Neither ByteandSwitch nor a few other related sources indicate that the bank had an email archiving solution in place. Would that have made a difference in this particular scenario? If the trader really did act alone, then probably not. However, perhaps the better question is: would it USUALLY make a difference in a situation like this? The answer to that is an overwhelming yes. It is rare for a solo operation of this magnitude to be carried out without any co-conspirators or helping hands, no matter how big or small the role might be. A comprehensive review of archived email more often than not reveals that there was something going on behind the scenes that just managed to stay quiet.
So, what is the big picture here? In my humble opinion, if email retention was truly not a factor for Societe Generale, the bank must realize that it could have been. I would even go so far as to say it SHOULD have been. I am blown away that Jerome Kerviel managed to supposedly pull this off without any assistance. Whether poor email management is responsible for allowing Jerome Kerviel to slip through the cracks or not, there is no doubt that something like this will happen again. And next time, there is a good chance it wil be at the hands of poor email management.
My advice: begin treating email management just like any other form of insurance. What do auto insurance, health insurance, life insurance, and travel insurance have in common? They are each highly important policies in modern society that guard against potential tragedy? At this point, email insurance really should not be considered any different. E-discovery proceedings, email audit inquiries, political scandals, and criminal activity are just a few of the essential reasons why it is time for ALL organizations to integrate an email archiving solution.
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