The SVB collapse is a red flag for workplace staffing protocols

The recent collapse of Silicon Valley Bank has left many employers and employees fearful that their business could be at risk. But with the right risk management protocols and personnel, future crises may be easily avoidable.  

SVB's former chief risk officer departed the company in spring of 2022 after nearly six years of tenure. The bank announced the hire of Kim Olson as its new CRO in January of 2023; these kinds of risk-focused leadership positions are intended to ensure a company's procedures, protocols and strategies are fully implemented in order to protect the company. In the case of SVB, this kind of gap in continuity may explain the lack of safeguards in place when depositors began taking their money out in droves.

"It is a recurring theme in companies like Silicon Valley Bank to not fully staff their internal controls positions," says Jason Walker, co-founder of consultancy Thrive HR. "The HR jobs that would be looking after important things like making sure that important policies or procedures are followed have been left unfilled and as a result, the steps needed to ensure the right governance within an organization have not happened."

Read more: Don't wait for the next bank crisis to protect your payroll

Internal control jobs are positions created to minimize risks, protect assets and ensure companies are adhering to necessary policies, rules, regulations and laws. These positions include audit managers, chief information security officers, heads of risk management and data analysts. They are vital to the stability of a company, according to Walker, yet too many businesses are still slow to fill them — or worse, make the executive decision to leave them vacant altogether.  

"To not have your VP of risk management in place is just malfeasance by Silicon Valley Bank," Walker says. "When you have a responsibility to manage a corporation and set a standard set of practices like banks do and you fail to do so, clients' investments aren't safe, their stocks are not safe, their crypto is not safe." 

Cost-saving is one of the major reasons companies choose to drag their feet on hiring certain internal positions. This trend of slow-rolling positions to the detriment of clients is not unique to SVB — Credit Suisse, a Swiss investment banking company that was recently taken over by UBS, has historically struggled to manage risk, according to Walker, landing them in a very similar predicament. 

The solution is clear: if banks cannot be trusted to fill necessary positions in a timely manner, they should be legally required to, Walker says. 

Read more: Silicon Valley Bank collapse highlights the importance of an internal communications strategy

"That's why we're in a lot of these situations — because banks think they know better and haven't been forced to fill these positions," Walker says. "But we're at the point where we're going to have to start because they're not maintaining their fiduciary relationships and looking out for the best interest of the consumer and the customer and the shareholder."

Walker suggests federal laws should be put in place to fill these positions in a timely manner. In addition, regulators should also ensure that internal control positions are protected against layoffs, so that in moments of crisis, they can't be vacated at a company's whim. These protections can help unsuspecting customers avoid financial ruin, Walker says.   

"There needs to be more discussion about this in quarterly earnings calls, and more transparency to the customer or the consumer about how they are managing what's going on internally," he says. "Because we all assume that these companies are doing the right thing, but in reality, they're not."