Navigating a leading global financial corporation through a financial crisis

Walter Kielholz shares insights from his recent business and personal experience

The Swiss-American Chamber of Commerce and the Swiss Society of New York jointly held an event on 14 April 2010 with keynote speaker Walter Kielholz, Chairman of Swiss Re. Mr. Kielholz spoke on the topic “Navigating a Leading Global Financial Corporation Through a Financial Crisis”. The presentation, held at Swiss Re’s midtown New York office, was followed by questions and answers and a cocktail reception.

Mr. Kielholz gave an eloquent and lively account of a financial company’s navigation through the recent financial crisis. He drew analogies from two very different subject areas: from his tenure with Credit Suisse, where he was Chairman from 2003 to 2009, and from sailing, which is a personal passion.

Mr. Kielholz explained that successful navigation of a boat depends on four factors:

  • The first is knowledge of the boat: its design, strengths and weaknesses as well as what can be done and what cannot be done with it.
  • Second is the quality and expertise of the crew. Does everyone know their role in all circumstances? Is the crew overconfident or does it jump ship when the sea gets rough?
  • Third, can the crew judge the weather and does it know where the boat is relative to rocks and shallow water?
  • Fourth, do we know what others are doing? We are not alone - and competitors, governments, clients and the public influence the outcome of decisions.

It is often times very difficult to judge where we are in a crisis or trend, and to determine when the inflexion point is reached, Mr. Kielholz continued. An assessment in hindsight is easy; hence, while much of the commentary following the crisis has been accurate, it was not so obvious at the time. There were warning signs, but a delicate balance must be struck between warnings and opportunities. It is particularly difficult to assess what the competitors, clients and governments are doing, which is often not what they claim or even intend to do.

Mr. Kielholz noted that, during the financial crisis, government crisis management decisions were made in very quick steps, almost on a weekly basis , which impacted trading and management decisions during execution. As a result, the outcome of any decision became quite unpredictable. Consequently, many companies made only one decision: to wait. At the peak of the crisis in the fall of 2008, counterparty trust had completely eroded, and as a result liquidity vanished.

In the case of Credit Suisse, Mr. Kielholz explained, the bank was fortunate because it was well  capitalized. Just before the start of the crisis Credit Suisse had sold its Winterthur insurance business and had enough cash at hand. However, a new CEO was appointed before the crisis, which could have posed a risk. Fortunately, the new CEO, Brady Dougan, is an investment banker who brought very relevant expertise to Credit Suisse and was able to de-risk the balance sheet early on in the crisis. Also noteworthy is that – in contrast to the management of other financial sector companies – Credit Suisse’s senior management responded with calm and discipline. These factors, Mr. Kielholz concluded, helped Credit Suisse tremendously in navigating the rough waters of the financial crisis.

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Swiss-American Chamber and Swiss Society co-joint event

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