leader Anthony P. Terracciano warned Monday, executives should not rely too heavily on the specialists who design new financial products.

"In the old days, the guys who had the decision-making power knew the most," he said. "With the new products, the decision-maker is the one who knows the least. Very often, fear and/or laziness can result in de facto abdication."

A chief executive -- without any help from specialists -- ought to be able to explain to the bank's board the risks associated with any new activity. "If he can't explain it in five minutes, he doesn't understand the risk," Mr. Terracciano said.

Kicking off the American Institute of Certified Public Accountants annual banking conference, Mr. Terracciano also took a jab at Wall Street analysts, whom he described as "not the most energetic group of people in the world."

Too often, he said, bankers focus on risks identified by analysts, such as credit card risk, instead of taking a broad look at the core elements of sound banking, such as return on equity, revenue growth, earnings per share growth, and risk management.

"Security analysts have a tendency to focus on one of those variables at a time," said Mr. Terracciano, who began his career in 1964 at Chase Manhattan Corp. and rose to vice chairman before leaving in 1987 to become president of Mellon Bank Corp. "They have a hot topic, and that's what they're focused on."

That brand of risk management, however, often causes bankers to focus on improving underperforming business lines while ignoring risks posed by fast-growing units, he said. High-performing units should get the same scrutiny as money-losers, because units with accelerated growth are often cutting corners and pose the greatest operational and reputational risks, Mr. Terracciano said.

"Ask the manager: How much time does he spend with people who are 20% over plan?" he said, referring to staff members who dramatically exceed their goals. "How come he got so smart all of a sudden? We don't have that kind of business. I don't worry about people 20% below plan."

Trends such as product innovation, consolidation, and increased Internet delivery have made it more important than ever to take a broad look at the attendant risks, he said.

Mr. Terracciano led First Fidelity Bancorp for six years before it was taken over by First Union Corp. He retired at the end of 1997 as president of First Union. He is teaching and doing consulting work for Deloitte & Touche and Warburg Pincus.

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