The 2008 financial crisis was a pivotal event that resulted in significant challenges for various organizations. Citigroup was not an exception, and it dealt with multiple risks. Firstly, the organization was subject to financial risks because mortgages were packaged into securities and sold off internationally (Cohan, 2018). This issue occurred because of poor management decisions that did not predict negative outcomes. Secondly, Citigroup suffered from reputations risks because a failure to meet its financial obligations can damage the organization’s image. Thirdly, operational risk was associated with the fact that Citigroup frequently violated federal restrictions regarding financial activities (Mattera, 2020). The risk analysis demonstrates that the 2008 financial crisis resulted in significant challenges for Citigroup. That is why it is not surprising that this organization required significant support to overcome financial challenges.
Based on the information above, it is impossible to state that any of the risks were more dangerous than the others. The risk measurement procedure demonstrates that any of the identified issues could lead to negative consequences. Thus, the suggested risk management recommendations should be directed to address all the identified problems. The first recommendation was to avoid packaging mortgages into securities. This suggestion focuses on the idea that the selected organization required more professional and experienced management. In addition to that, Citigroup should have drawn more attention to the federal restrictions and regulations. According to Porch (2018), the organization and other large banks frequently receive significant government support. That is why these businesses are even more expected to abide by government regulations. Now, it is possible to believe that these recommendations could have helped avoid witnessing significant problems and requesting taxpayers’ money for a bailout.
References
Cohan, W. D. (2018). How Citigroup escaped financial disaster in 2008. The New York Times. Web.
Mattera, P. (2020). Citigroup. Corporate Research Project. Web.
Porch, S. (2018). Here’s why Citibank should have been allowed to fail in 2008. The Daily Beast. Web.