Francesco Pavoni, head of MENA at PA Consulting, is quoted in an article in Arabian Business on the lessons that have been learned following the collapse of Lehman Brothers and the global financial crisis ten years ago.
Commenting on Dubai, Francesco explains: “Dubai is an important part of the global financial system connected to others. What happened here was a delayed reaction to a set of defaults triggering a systemic collapse across markets and financial hubs that affected its liquidity position…the regulators and control architecture were not ready to cope with a problem of the magnitude of the imported crisis.”
Francesco goes on to say that: “The mindset of the financial management architecture over the past few years [globally and regionally] has been to minimse short term profitability [in favour of long-term stability].” He says that this has all come at an expense and explains: “As banks have improved compliance, like their global counterparts, profitability has been low.”
The article goes on to discuss stricter practices relating to whom and how financial institutions hire to manage their businesses, especially locally. Commenting on this, Francesco says: “It’s not necessarily the firms that are making the errors in many cases, but the system of corporate governance that needs to be updated. This is not to say that the world hasn’t made great strides in improving the framework of financial management architecture, but that while we’ve worked hard, we haven’t worked hard enough to use the steps taken as a direction toward a stable future.”