Question

What was it about the way in which the JPM’s London Synthetic Credit Derivative portfolio was managed (Drew and her reports) that increased the risk of a “mishap”?

Answer 1

The risk of ‘mishap’ was increased with regards to JPM’s London Synthetic Credit Derivative portfolio due to the way the portfolio was managed. First of all there was reporting line and disclosure deficiencies. Regular risk reporting was not made to Drew but was made to bank’s CRO. Being the head of CIO Drew should have been the direct official reporting line but this was not the case. Moreover Drew was provided with only aggregate CIO portfolio risk numbers. She should have been receiving separate numbers for synthetic credit portfolio positions but this was not the case.