In the post-crisis world, it could be argued that the head of risk is the most important person at a big bank. So well done to the Bank of England's Prudential Regulation Authority (PRA) for insisting on a governance tweak at Standard Chartered . In future Richard Goulding , the chief risk officer, will report to the chief executive, Peter Sands , rather than to the finance director, Richard Meddings . The move will not cause an earthquake at Standard Chartered ; nor is there any suggestion that Meddings' performance has been lacking. But the PRA's preferred model looks cleaner and more logical. The head of risk ought to take any worries about financial weaknesses directly to the top. Moreover, reporting to the big boss should cause less confusion about where responsibility for risk lies. Most big banks these days order themselves that way, so the PRA will not have to make a series of interventions. But it would help if the regulator spelled out whether direct reporting on risk to the chief executive is now mandatory. If a decision has been taken informally, why not make it official?
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