The Collapse of Barings Bank, HR Management

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How was loss aversion apparent in Nick Leeson’s conduct? Explain.

2. Judith Rawnsley, who worked for Barings Bank and later wrote a book about the Leeson case, proffered three explanations for Leeson’s behavior once the losses had started to pile up: 1) Leeson’s loss aversion stemmed from his fear of failure and humiliation; 2) his ego and greed were exacerbated by the macho trading environment in which he operated; 3) he suffered from common distortions in thinking patterns that often result from high levels of stress, including overconfidence and denial. Which of these explanations (or all) do you think played a role in this case? Why?

3. Leeson explains that he wanted to stop, but could not. Based on his and Rawnsley’s reflections, where do you think the blame primarily lies and why? With Leeson individually, or with the system within which he operated?

4. If you were in Leeson’s position after the initial loss made by the employee, what would you have done? Why?

5. Do you have trouble owning up to mistakes that you have made? Do others whom you know? Explain with examples.

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