I am not sure why the Boards did not question the strategy of the management while this business was growing manifold and banks were able to make huge profits by repackaging these mortgages as AAA securities through structured deals. I have a very practical suggestion for the distinguished group present here: seek a detailed analysis of the income stream.
Banks ought to conduct a thorough assessment of the products, services, activities or business streams that are most profitable as this is where the maximum risk must be lurking. The path and passage of risk can be truly understood only through a scrupulous income analysis. A risk management framework is incomplete without an effective system of internal controls and methodologies.