The Risk Ignored – Part I, Chapter 4. The Irony of Risk Intelligence: When GRC’s Founders Became IRM’s Followers

When Risk Culture Meets Rocket Fuel

In early 2007, SunTrust’s board appointed a new CEO. The new CEO had been waiting in the wings since SunTrust acquired his bank that was heavily weighted toward mortgage banking. Unlike his predecessor, he saw risk not as a discipline but as a throttle—something to push forward, not manage. His first strategic move was aggressive: set a Big Hairy Audacious Goal (BHAG) – a term ironically made famous by Jim Collins’ book “Built to Last”. The SunTrust BHAG, as defined by the new CEO, was to more than double the mortgage portfolio within twelve months to compete head-on with Wall Street’s securitization giants.

To hit that target, underwriting controls were systematically dismantled. Incentives for mortgage originators surged dramatically, creating an environment ripe for aggressive lending and shortcuts. When I saw these changes, I foresaw the inevitable crash. As the senior executive overseeing Internal Audit, Compliance, and Risk Management, I confronted both the CEO and his protégé—the head of mortgage banking—in a tense meeting. The mortgage head literally writhed in his seat with anger; I had never seen anything like it.