RMA—The Risk Management Association features an interview with Dick Kovacevich in its September RMA Journal . He was interviewed by RMA President and CEO Maurice H. Hartigan II.
Philadelphia, PA (September 2, 2003)— In a wide-ranging interview in the September issue of The RMA Journal, Dick Kovacevich, chairman and CEO of Wells Fargo & Company, discusses how the company’s culture impacts customer trust and loyalty. He also urges the industry to make it easier for victims of identity theft to restore their financial identity, and he credited industry regulators for maintaining strong corporate governance at financial institutions. Meanwhile, he says the budget deficit in California is “a great concern” to his institution, which is headquartered in San Francisco.
Wells Fargo & Company has about 70 unique businesses, which Kovacevich manages through a common culture and shared vision and values. “If you don’t commit to management by culture then it won’t work,” Kovacevich told Maurice H. Hartigan II, RMA president and CEO. Training employees to work with customers is a top priority at Wells Fargo.
“If you pay more attention to your people, they, in turn, will take care of the customers, and if they do that, the shareholders will prosper,” said Kovacevich. “A lot of people have it backwards. They start with the shareholder. At Wells Fargo, our people are our competitive advantage.”
Kovacevich says the financial services business is about risk and reward. Testing is “the greatest management tool” to decide whether an opportunity represents an attractive risk/reward situation.
In discussing corporate governance, Kovacevich said, “Banks have benefited, in contrast to industrial companies, because we are highly regulated….If a problem is found, it’s dealt with quickly and fairly severely. So the probability of having a massive fraud in banking companies is less than in industrial companies…and it’s one reason why our industry’s bonds and stocks haven’t fallen to the extent of other industries.”
Kovacevich also expresses concern about California’s $38 billion budget deficit, saying the state needs to reduce spending and increase taxes while at the same time improve its economy. “The real trick is to solve the deficit without massive tax increases that will cause businesses to move jobs elsewhere. We also have to learn that we need to save today for potential problems in the future. If we don’t start developing rainy-day funds and reserves during the good times, we’re going to face this problem again and again.”
Click here to read the full interview.
RMA—The Risk Management Association is a member-driven professional association whose sole purpose is to advance the use of sound risk principles in the financial services industry.
Founded in 1914, RMA promotes an enterprise-wide approach to risk management that focuses on credit risk, market risk, and operational risk. Headquartered in Philadelphia, Pennsylvania, RMA has about 3,000 institutional members that include banks of all sizes as well as nonbank institutions. They are represented in the Association by 16,000 commercial loan, credit, and risk management professionals in the 50 states, Puerto Rico, Canada, and numerous foreign cities, including Hong Kong, Singapore, Melbourne, and London.