Bank of America Stress Tests Its HR Chief

SMITH BRAIN TRUST -- On its face, Bank of America delegating stress test oversight to its human resources chief is a "head scratcher," says Clifford Rossi, professor of the practice at the University of Maryland’s Robert H. Smith School of Business.

As part of a larger leadership shakeup, the megabank recently appointed its global head of HR Andrea Smith to a newly created chief administrative officer position. The role encompasses global corporate strategy and includes managing BofA’s Dodd-Frank stress tests. 

Rossi, also the chief economist for mortgage insurer Radian and formerly senior risk executive at Citigroup, Washington Mutual and Countrywide, tells American Banker it's questionable whether a human resources leader is best-equipped to oversee measuring risk to determine the bank's ability to withstand an economic downturn like the 2008 recession.

On the other hand, Rossi says an argument favoring the HR executive would be that a chief risk officer overseeing stress testing, instead of Smith in this case, could be viewed negatively by employees as "pushing down" the risk function on them, which could backfire. "If she's coming from HR, everybody is more acceptable to owning the risk culture.” 

Among other American Banker-tapped experts, University of Michigan business professor Dave Ulrich says “HR executives are no longer just processing employee benefits or managing a company's 401(k). Rather, they excel at managing others, have broad insight into a firm's talent, and can lead large groups to achieve specific goals.”

Rossi concurs, but adds a caveat. “If she's a really strong administrator who can get things done and bring things together on a large scale, then that may be the argument for why she was selected,” he says. "But at the end of the day, culture starts from the top, from the CEO and the board.”

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