Question

Business Ethics is an online magazine with a strong heritage in the fields of ethics, governance, corporate responsibility and socially responsible investing. The mission of Business Ethics is to promote ethical business practices, to serve that growing community of professionals and individuals striving to work and invest in responsible ways. Go to Business Ethics find an article that interests you and related to the subject matter of this course. Outline the article and Discuss.

Answer 1

The article selected for the discussion is related to the banking organization Wells Fargo. The concerned bank was recently in news for the bad reasons when a financial fraud broke out where the huge number of checking accounts and saving accounts were created on behalf of their consumers. Here, the most important aspect is that consumers’ consent was not taken and it amounts to be a fraud. Recently, the bank has agreed to work towards the protection of the best interest of the shareholders and other stakeholders and the bank management has agreed to review the business standard and bring necessary changes.
These recent developments are the outcome of sustained pressure exerted by the different shareholder groups. Though, it should come from the bank management on its own to take initiatives and build a strong internal risk management framework that can help prevent such types of fraud and protect the interests. Besides, it is not only about the shareholders, but also about the employees who are working, the community around that the bank is operating and the regulatory agencies who are facing the challenges that are created by the malpractices of the bank. Hence, the impact magnifies when other banks take the cue and take similar decisions based on moral hazard and agency conflict. So, bank management should proactively work to prevent such frauds by implementing and updating their corporate governance and business ethics practices. It will prevent the occurrence of such problems that can disturb the confidence of the different stakeholders.

Reference:

In Search of Corporate Values: Wells Fargo Agrees to Listen to Stakeholders. Retrieved from: http://business-ethics.com/2018/03/26/1320-desperately-seeking-corporate-values-wells-fargo-agrees-to-listen-to-stakeholders/