A bank is governed by a board of directors and by senior management. These officers decide on the bank’s strategy and key targets. Their decisions have far-reaching consequences for the bank’s operations, as the example of “managing for value” demonstrates: a misguided decision may have undesirable effects. This considered, I would like to focus on the way bankers should make their decisions.
The classical virtue “Prudentia” – in modern English, “Prudence” – can help us here. Prudentia is the virtue that stands for “making careful decisions”. It requires a capacity for reflection, careful analysis, and balanced judgment. This sounds like a goal worth striving for, but what does it mean in banking practice?