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May 2016

Financial crisis and changes in management controls in banks

The financial crisis of 2008 hit banks in Iceland and Denmark with different intensity. There was a difference in how management controls changed in response to the crisis.

This research analyses the difference in impact of the financial crisis of 2008 on management controls in banks. Management control professionals, including management accountants, risk managers, compliance managers and internal auditors served as “translators” of change while the Chief Executive Officers of the banks acted as change agents. The research was conducted in the three largest banks in Iceland and three Danish banks. The reason why Danish banks were selected for comparison is the common historical background of Iceland and Denmark.

"I think that the change was the same as when you are driving on a highway and suddenly realise you are doing 150 km/hour. We were not restricted by liquidity or capital 10 years ago and that’s why we did not focus on it in the same way as we do now."

Danish manager

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Financial crisis and changes in management controls in banks