This is likely to be taught in Management classes in the future.
According to the new report, Fed supervisory staff knew or should have known about these vulnerabilities as early as March 2022. Despite that, supervisory staff did not take prompt and decisive action to encourage or require Silicon Valley Bank to reduce its interest rate risk or concentration of vulnerabilities.
The report found a significant factor contributing to supervisory inaction was a long-standing culture of risk aversion. Staffers believed it was personally safer to take no action unless they were certain it was exactly right.
A lack of clarity regarding decision rights compounded this culture of risk aversion: Supervisory staff were unsure who could provide certainty that a particular action was correct.
Depending on certainty before you act is a terrible way to handle risk mitigation - a lesson for all future managers.