Tag Archives: Citigroup

Corporate Governance and Why it Matters

Everyone agrees that the economies around the world today are a lot stronger (pre-COVID-19 pandemic) when compared to the past several decades. The economies depend on multiple factors one one of them is greed. The question is how do keep this innate human behavior in check.

Many companies today has adopted Corporate Governance as the mechanism to ensure that greed is not being used to define a corporate culture. Corporate Governance has many definitions. If you ask two different companies, you will get two different answers. Essentially Corporate Governance refers to mechanisms that are in place to ensure that companies follow the rules of law and moral practices for the benefits of many. According to Wikipedia the mechanisms include several participants (internal and external) working together to ensure the success of the companies while continue to abide the laws and regulations.

The bigger question is why does Corporate Governance matter. Many entrepreneurs earlier in the past centuries became successful not because of luck only but some of them relied on tactics on the borderline of illegal. Some of them may include slavery, extortion or fraudulent activities. There were several major disruptions in the financial market the past several decades which raise the question of corporate responsibility of these companies. There were a lot of interests from the public and political interests in this area and began to hold these companies responsible. Hence, Corporate Governance was created.

The subject of Corporate Governance is considered new when compared to many advancements in the business world. A lot of companies continue to expand this area and they find that Corporate Governance involve changing the corporate cultures and changing the culture takes time. I do not intend to cover this subject in details as it includes many other fields. The question that I am trying to answer is why it matters in our modern society.

While many large companies continue to claim that they have strong Corporate Governance, sometimes greed will raise its heads and morality will take a back seat. The best example is how Goldman Sachs disregarded what is right or wrong and helped the Malaysian Government under then Prime Minister Najib Razak channeled $3.5 billion into his own account. Another example is how Apple Company continue to exploit cheap labor in China while reap big benefits from selling its smart devices.

A company exists to make money for its shareholders. Unfortunately, most shareholders want to be able to reap the benefits regardless of what market conditions. When the economy is bad, companies will need to find new ways to increase the income and it is not an easy task. Hence, some companies will cut corners or do things “under the desk” to ensure there are steady flow of cash. How does a company balance greed vs corporate responsibility?

The financial crisis of 2007-2008 was perhaps the biggest tipping point of balancing corporate greed vs corporate responsibility. Without going into details, the crisis was due to collapse of real estate market due to excessive lending by financial institutions to subprime borrowers. The end results were numerous debate by many interested parties (including regulators from around the world) to finally put a system in place to prevent this from happening again. The creation of Volcker Rules myriad of rules from OCC were some of the regulations in place to combat this. Dealing with all different rules and regulations require a big commitment and large resources from companies. Using banks as an example, there was a shift in managing these expectations with the creation of compliance departments and increased visibility of Internal Audit. Ultimately the board of directors are held responsible for the actions of the companies. Hence, the creation of Corporate Governance.

My career has always been in the control functions of multi-national banks. Since I started working professionally, I see significant changes in corporate culture of the banks I worked for. When I was at Citigroup, I observed a strong governance in all businesses. The creation of second line of defense to monitor the risks of each businesses and the increase responsibilities of Internal Audit helped Citigroup to become a stronger bank today. Currently I am working at HSBC and I have noticed the same. The corporate office place Corporate Governance on top of everything else and place a heightened emphasis in managing the risks of every line of business. HSBC was finally able to have the Anti-Money Laundering/Bank Secrecy Act Consent Orders terminated in July 2017 due to this efforts.

Corporate Governance provide long-term benefits for every company and it ensures viability of its business model. However, in order for this to work the tone from the top is extremely important. There should be constant communication from senior management to ensure every employees are aware of this. Working at HSBC I appreciate how the culture of the bank has changed since I joined. HSBC was put in the negative limelight for more than a decade due to the AML/BSA Consent Orders. The cost of reputation was higher than monetary fine by the US regulators.

Companies will continue to exist to make money for their shareholders. Companies are not run by machines but managed by actual persons. If there is a strong Corporate Governance and there is a sense of doing the right things for the society most companies will stand to reap the long term benefits.


Importance of Data in Advancement of Artificial Intelligence (AI)

There is a misconception that Artificial Intelligence (AI) started in the past decade. It’s true in a sense, but the real AI started well before then. According to Wiki, the field of AI started in the 50’s. In fact AI can trace back to several centuries back to the use of automaton. The AI becomes one of the most important field today because of several developments: the availability of computing power and availability of data.

I am not an expert in this field but having to learn this subject in the past year, I was surprised to find out that my career background is somehow related to the development of AI. I started my career at Arthur Andersen and I was exposed to “Big Data” when I was responsible for financial reporting at Arthur Andersen. Before Arthur Andersen disappeared from the business world, it has one of the best data system – the Financial System of the 90 (FS90). I had the priviledge to work with Ralph Schonenbach, who is now the CEO of Envoy, in developing several tools for the Financial Control of Arthur Andersen.

I found the data owned by Arthur Andersen fascinating. With a complete data map, I was able to generate various reporting using Microsoft Access. Some of the tools that I created went on to become important integral part of management reporting. The experience I obtained from Arthur Andersen had helped me tremendously as I moved to Citigroup and HSBC where I continue to create different management reporting for the management and the US banking regulators.

The AI today is no different that what I experienced when I was Arthur Andersen. Essentially the AI uses huge amount of data to create trends, outlook and suggestions; from this the AI can harness the data to automate repetitive tasks. The AI has becoming more important as Big Data has becoming readily available. The explosion of smartphones also help fuel the AI as more and more companies found ways to collect data from smartphone users though the apps. For example, apps such as Spotify, Netflix and the ubiquitous Google Chrome collects terabytes of data every single day. Many companies, particularly Google saw the potential of the availability of data and started to monetize this asset.

The computers today has also advanced exponentially that they allow AI developers to be able to crunch data more quickly and efficiently. I remembered when I first bought my first PC in the early 1990s was using 386 Intel chips running at 60 MHz. Today PCs are running at teraflops – a teraflop is a unit of computing speed equal to one million million (1012) floating-point operations per second. Of course not everyone needs that kind of computing power for their everyday use. That’s where the computer hobbyist come into the picture with the development in micro-computers (Raspberry Pi and Arduino). Nowadays many companies in the AI business are talking about Internet of Things (IoT). In case if you are not aware, IoT refers to the interconnection via the Internet of computing devices embedded in everyday objects, enabling them to send and receive data. We are talking about from toasters to door bells.

Why is data so essential to the development of AI? I’m not a data scientist (which is a new field as a result of the explosion of AI). But I can tell you that without data, AIs are just dumb machines. Data enables AI developers to piece and stitch different sets of data together and generate a trend. And from the trend, the developers can generate hypothesis and create predictable analysis.

Let me explain. Before I was exposed to Microsoft Access, I used Microsoft Excel to do a lot of computing work. All financial analysis requires Excel. However Excel data is flat – meaning that what numbers you put in the formula will generate a known result. Microsoft Access database is different because it is called a relational database – essentially the database contains multiple flat tables interconnected through a relationship using key fields. From the relationship, Microsoft Access allows the user to create different results based on selected criteria.

The AI today is using the same concept but at a bigger scale. The data sets may not be even related to each other but the AI understands what the user is looking at and produce results that could be related. Let’s use Netflix as an example. When you first sign-on to the Netflix, the service asks you what genre of movies you like to watch. As you use Netflix more and more, the AI starts to build your profile more and more. It will begin to suggests some of the movies that you would prefer to watch. For example I have always been a WWII aficionado. When I first signed up to my Netflix account, I never told it that I want war movies. Over time it starts to suggest war movies, documentaries and even Sci-Fi movies that are war related.

The above example is on the software side. But what about robotics or hardware. When does data come into play. When I attended the AI Summit, I had the privilege to attend Lockheed Martin presentation on AI. I found the Automatic Ground Collision Avoidance System (GCAS) fascinating and how it saves lives. The pilots of fighter jets go through maneuvers that can produce g-forces strong enough to render a pilot unconscious or cause spatial disorientation.  The GCAS will kick in and automatically level flight and prevent the fighter jets from crashing into the terrain. The GCAS requires multiple data feed such as wind speed, aircraft speed, location of the aircraft, pilots responsiveness, historical data to determine when it is appropriate to take control of the aircraft.

Anyway, this is just a blog not a scientific paper to argue how data becomes so important in the AI field. I am not qualified to provide a view in this field. After being a champion of data quality and user of data for over 15 years, I can tell you that data is everything. Our lives are driven by data and they will continue to be driven by data. I won’t be surprised if we start to embed AI in our consciousness in the next decade or so. There are many opponents to this idea as it crosses the line of privacy – that is another subject for another day.

Is working for big corporations better than small companies?

All my professional working experience has been evolved around big multi-national companies. Prior to working full-time, I was exposed non-profit organizations and also small companies on Wall Street, New York.

After being exposed to different working environment, personally without a doubt working for big corporations is preferable for several reasons. There are other cons too, but the pros definitely outweigh the cons. Obviously not everyone can and will have the opportunity to work for big corporations. If given the chances, I would highly recommend that you take “going” big route. In this blog I will list some of the pros of working for big corporations. My next blog fill focus on the cons.

If you read my previous post, I was lucky enough to be hired by Arthur Andersen. You may not heard of this company because it is no longer in business after the Enron crisis. Arthur Andersen was one of the big 5 public accounting firm up until early 2000.

After leaving Arthur Andersen I moved to Citigroup and remained there for 12 years. Finally, I’ve landed a senior manager position at HSBC, one of the biggest banks in Asia.


Big corporations allows exposures at all level. Big companies are like well oiled machine and the require all cogs and wheels to turn at the same time. The opportunity is limitless if you put in the work. Work means getting things done 110% and do it above and beyond what is asked of you. Once you are recognized for your work, you will be recognized by all level of management.

Movement within Organization

Companies today, like HSBC, care about its employees well being. They care because studies find that it is cheaper to retain “A” employees than continue to hire entry-level employees. Hence, to ensure employees are happy some companies allow movement within the organizations. HSBC is a UK-based company and it my tenure at the bank, I’ve known several colleagues moved from UK to US, and from US to Hong Kong. Movement within the US is also encouraged.

Higher Salary

Most big corporations do pay better than small companies. Not only because they have the means to afford high salary, it is the same reason as above to retain “A” employees. Of course this also depends what department or business you are in within the corporation. Taking HSBC as an example, employees who are in the investment bank will probably pay higher than employees in Human Resources. As an example, my salary (including bonus) increased by 700% when compared to my salary at Arthur Andersen 21 years ago.

Recognition and Achievement

Working in a big corporation is great but it is important to keep your personal goals in check. Are you happy in what you are doing? Are you being recognized for the work you have done? The answer is quite simple if you want to achieve your personal goals: work smart, not work hard. If you work hard, sooner or later you are going to burnt out. Work smart includes how do you do things better and more effective. Companies recognize employees who are able to do things more effective at a shorter time frame.

Fringe Benefits

Big corporations continue to provide health care and other benefits to their employees. Depends on the industry, things are not what is used to be. Prior to the financial collapse in 1998, big banks would give all kinds of benefits to their employees. Today things are very different as a lot of the banks trying to cut costs. Citigroup stopped investing in pensions for its employees after 1998. We no longer had free lunch during training sessions and employees are absorbing more healthcare costs as health insurance costs starting to spiral out of control. Some companies such as Google, Facebook or other “hot” tech companies continue to provide their employees a log of fringe benefits that most small companies are not able to.

If you disagree any of my points above, I would like to hear them. Feel free to comment.