There are few books that address the management of records in the business world and fewer still that discuss records management in the context of global financial markets.

Companies operating in these markets are subject to particular pressures that arise from the need to address the requirements of different financial regulatory bodies across the world; more generally, companies with a global reach need to be aware of, and comply with, the laws of each different jurisdiction in which they operate. Although many of the record-keeping issues that large companies face are similar to those encountered by small and medium-sized businesses and by public sector organizations, these particular pressures are unique to, or especially significant in, the financial sector. The global financial sector encompasses a variety of different types of companies ranging from investment banks and fund managers to hedge funds. The structure of financial markets and the types of companies that operate within them are discussed more fully in Chapter 1 ‘Global financial markets’. For clarity, all of these companies are normally referred to in this book as ‘financial institutions’.

The book focuses on regulatory, legal and governance issues associated with managing records in financial institutions and on records-related risks that financial institutions may face. The purpose of the book is to explore these issues and to offer recommendations for meeting the challenges to which they give rise. The book aims to cover the major record-keeping issues that global financial institutions need to address, and its contributing authors have been selected for their expertise in one or more of these areas. Underpinning the book is a conviction that, if a financial institution is aware of the need for good recordkeeping and takes action to build a sound records management programme, it will be more readily equipped to provide evidence of its decisions and actions, demonstrate compliance and respond to investigations and litigation. If it does not do so, sooner or later a crisis will arise and the institution will face the costs, risks and disruption of having to create large crisis management teams at short notice.

Introduction

Reading books for enjoyment in the classroom has been endangered by the emphasis given in the English national curriculum to reading and analysing extracts. As a result, some children may leave school without ever having read a whole book and many teachers become disillusioned. This chapter follows one young teacher's journey from the American Midwest to the English West Midlands; from idyllic teaching to disillusion in the classroom – and, ultimately, to inspiration in the library. It will examine the skills shared between teachers and school librarians, thereby empowering school librarians to be the instigators of a veritable reading revolution. And finally, it will provide practical ideas which school librarians and teachers can deploy to bring reading for pleasure back into the classroom.

First of all, let me enlist your confidence by stating my credentials. I'm not an expert in any field. I haven't won any awards. I haven't invented anything. I am married, with two small children and two small dogs. I live in a house and drive a car. I watch rubbish television and fall asleep on the sofa. I hate doing the dishes and have a minor obsession with tea towels. I'm just normal. The only thing that might separate me from most people is that I love my job. Absolutely, 100%, without doubt. Sometimes I feel guilty about saying that, like it's a confession: I'm a school librarian and I love my job.

Of course it wasn't always this way. Nine years ago I loved my job – and I was a teacher. But just one year later, still working as a teacher, I would have said: ‘I'm a teacher and my job makes me cry. Every day. I'm a total failure. I want to quit, but if I do I will be deported.’ And that lasted for nearly four years. So what had happened from one year to the next?

I had moved to England.

The teaching experience in America …

Memories are always rose tinted, so I like to believe I was a great teacher in Wisconsin. My final student teaching experience was half in a traditional high school and half in a ground-breaking charter school (these are publically funded but privately governed schools which must demonstrate success or lose their charter).

Introduction

In some respects, the business that a financial institution performs on a daily basis has not changed in hundreds of years. It has always been part of the job of bankers to assess many pieces of information, determine the risks and make judgements about what business it is right to conduct. Today's basic approaches are similar to those that were in place at the time of the Medici dynasty in the 1500s.

One thing that has changed, however, is the technology used in financial institutions to create, store and communicate records and information. Since the commercialization of the internet in 1993, the complexity, velocity and quantity of information created and used by our society has grown at a phenomenal rate. The rivers of data in all areas of global financial markets have caused a revolution inside financial institutions as numerous systems try to perform similar tasks for many departments in slightly different ways.

All parts of a financial institution need to meet the ‘raised bars’ of new regulatory policies that presuppose that all necessary information can be quickly ‘Googled’. Today, an institution needs to know what records and data it has and be able to access them quickly and economically, if it is to rise to the new challenges it faces from the market and operational pressures introduced in recent years whilst remaining competitive.

Financial institutions’ senior managers are required to be more accountable personally by ensuring that they have an adequate plan to ‘know their data’ so that they can prove that the judgements they made at a particular moment were correct. To make this happen, internal functions need to work together to manage the digital infrastructure in which records are generated and stored.

Major developments in information technology

The records of financial institutions have always been used to track information about the world within the control of such institutions (the products and services offered to their clients) and information about the world around them (the state of the clients’ creditworthiness, the market, etc.). Since the deployment of the first spreadsheets in the 1980s, distributed analytical tools have allowed all parts of an institution quickly to form views of the digital world around them and take action.

Introduction

Every Tuesday, in my local library, there is a gathering of about 60 very young ‘readers’ who, as yet, cannot decode a single printed word but who certainly have all the characteristics of book-lovers. They are members of the Baby Bounce and Rhyme group. Every Friday, there is Story Time for the under-fives. The children listen, laugh, gasp, shout out and are totally absorbed in the narrative and pictures shared with them by the librarian.

Having spent my whole career teaching reading, it is delightful for me to observe events where children are having such a pleasurable introduction to literacy. Whatever may or may not happen in their homes, these children will start school knowing about books, aware of the enthralling power of stories and having had experiences with language in engaging, playful ways. I cannot imagine any teacher or parent thinking that these librarybased activities are just time fillers or entertainment for children. When it comes to preparation for more organized literacy education, few activities could be better than playing with the sounds of English and listening to stories.

The library where the activities take place has always been a good one but, like other public libraries, it is run by an ever-decreasing number of staff, who are enthusiastic and hard working, but unqualified as librarians. Despite this, a library manager has taken on the responsibility of contacting schools, encouraging membership and ensuring that there is a lively children's collection available. For older primary children there are holiday activities, a well-supported Summer Reading Challenge (see Chapter 5) and a Children's Book Award. These book-focused activities keep children interested in reading over the long summer break and let them see that it is not only teachers who promote the pleasures of reading. Librarians and teachers both want the same thing – to help youngsters to become confident, life-long readers. At a time when we are regularly told that standards in reading are not good enough, it would seem an obvious step to capitalize on the skill and support offered to schools by libraries.

Introduction

Financial institutions rely on the effective management of risk. While market and credit risks are well understood as categories of risk and techniques for managing them are relatively well developed, operational risk is a less understood and developed field of risk practice within financial institutions. Even less well understood and clearly defined are those risks related to the records a financial institution relies upon to conduct its business and manage other types of risks. Yet, in many cases it will be necessary for those involved in aspects of managing records to make risk-based decisions – in relation to the type of records that must be retained or the level of control needed to meet legal and regulatory requirements when these are not clearly delineated, in relation to the length of time for which records should be retained, especially in situations where there are conflicting legal or regulatory requirements, or in relation to how to handle records in mergers, acquisitions, divestitures and closures, to cite just a few examples. This chapter offers a guide to the basics of risk-based decision making concerning records and records management for those with little or no previous exposure to risk-management concepts. ‘Points to Ponder’ throughout this chapter are records-specific questions aimed at uncovering common records-related risks.

Records-related risk management relies on principles and practices that are common to the management of most types of risk but has as its particular focus the business records of the financial institution. This chapter defines risk management, outlines its key processes, identifies how to spot records-related risks, explains the steps in setting up a governance framework for a riskmanagement programme and provides tips and hints from the ‘front lines’ of battling records-related risks in global financial institutions.

Like records, risk is defined differently in different contexts. ARMA International, a leading professional association for records and information managers, has issued Evaluating and Mitigating Records and Information Risks (ARMA International, 2009), which draws on ISO/IEC Guide 73 to define risk as ‘the combination of a probability of an event and its consequences’.

Introduction

Readers of this book will, no doubt, have different backgrounds and varying levels of understanding of global financial markets. The first part of this chapter, therefore, is intended primarily for readers who are new to the world of financial markets. It explores these markets through the lens of different products and services offered in them, the different types of financial institutions that deliver such products and services, and the types of markets in which they are delivered. The chapter then examines the securities trading function within a financial institution to illustrate how records relate to the activities and processes undertaken by such institutions. This type of ‘business systems analysis’ is typical of the work required to build records management tools such as business classif ication schemes and retention schedules. Inevitably, this chapter introduces many technical terms, but wherever possible such terms are explained on first use.

Products and services

Financial markets exist to transfer capital efficiently from those who have it to those who want it for whatever purpose (e.g. for buying raw materials for production). They also transform capital from one form into another for the purposes of global trade (e.g. by exchanging one currency for another type of currency or by transforming debt to a tradable security through a process known as securitization). Financial services generally are divided into those offered to individuals – ‘retail’ financial services – and those offered to companies or governments. One example of a f inancial service to companies is corporate finance, the activity of raising capital for companies to use, generally in the most tax-efficient manner.

Financial services are achieved through different types of financial instruments or products. Wire transfers, for example, allow global transfers of payments between parties involved in financial transactions. A syndicated loan is a financial product in which a financial institution will structure a special loan for a client when the magnitude of the loan, or its complexity, is beyond the institution's own credit policy or risk tolerance. In such cases, the institution will act as an agent for a syndicate of banks who are willing to share risk participation, either pro rata or at different levels of risk.

Ask anybody who works with children or who cares about the future of young people and they will agree on one thing: reading is the most basic of basics. The child who reads is a successful child: more likely to succeed academically; more likely to succeed socially; and more likely to be inquisitive about the world around them, maybe even to feel empowered to try to change it for the better. This is not just my opinion. It is a judgement supported by a body as influential as the Organisation for Economic Cooperation and Development (OECD).

When you read often, when it is as effortless and integral to your being as eating, drinking, sleeping and breathing, you are able to empathize, to access and order information, to interpret and explore the world around you.

I know this from personal experience. My father was a factory worker. My mother was a shop assistant. I got the reading habit at Crewe Library as an eight year-old and I have devoured novels, biographies, autobiographies, histories, plays, poetry, periodicals, newspapers, magazines, comics and quiz books ever since. I was the first person in my family to go to university. I liked the experience so much that I attended three of them! I became a teacher and later an award-winning author.

When I visit schools and libraries to talk about my books young people invariably ask who inspired me. I always give the same reply. The books and the authors who wrote them inspired me. That is only half the explanation, however. Without the guidance of many dedicated librarians I would not have gained access to the inspirational power of the written word. To paraphrase the words of the Manic Street Preachers, libraries gave me power – and that also means the librarians that staff them. A library without a librarian is … a room. You might imagine therefore that there would be no dispute about the central place of reading in society and in the school curriculum. Sadly, this is not true. School and public libraries and school library services are under severe pressure. In difficult economic conditions, they are often at the top of the list for cuts.

Introduction

Global financial markets may sound like an unlikely environment for archivists to inhabit. But beyond the sharp suits and gleaming skyscrapers of the 21st century, there exists a past legacy teeming with prominent personalities, landmark deals, business innovation and pioneering cross-border relations. The wide sweep of this history reveals how the markets have helped to shape the economics, politics and society of the modern world. The historical archives of individual corporations allow us to focus in on the distinct corporate memories that make up this bigger picture. Every firm has a different story to tell: a unique corporate culture shaped by past employees, events and decisions.

Archivists take responsibility for preserving and promoting the archives to ‘bring to life’ these corporate memories; and they continue to breathe new life into the memory by selecting and storing more recent business records for future generations.

In fact, in-house archivists, and the corporate memories they maintain, are highly valued by an increasing number of companies around the world, whilst the archives themselves are being utilized in ever more imaginative ways to support business functions across the board. This chapter advocates the maintenance of a formal archival programme as a means of maximizing the benefits from company heritage.

The connection with records management lies in the simple fact that some records possess a surprisingly long and useful shelf life in the archives, many years after they have reached the retention deadline set with their creators. And one of the most intriguing issues today concerns this point of handover from the records management regime to the domain of the archivist. As explored in earlier chapters, the complexity of modern record-keeping within the global banking environment has required significant revisions to records management policy and procedures. This impact extends to archives too, as the archival profession's traditional practices are overhauled to ensure corporate memories are extended into the 21st century. This chapter begins by outlining the development of the corporate archives sector and its traditional approach to record-keeping. It explores the ways in which the modern business environment is challenging this approach and considers the potential areas for collaboration between records management and archives.

Introduction

As discussed in Chapter 2 ‘Conflicts of laws in multiple jurisdictions’, the application of extraterritorial laws and regulations can have profound implications for an international financial institution's record-keeping policies. Institutions therefore need to be aware of the existence and impact of such laws and regulations and to draft and review their policies accordingly. The USA has gained a reputation for the extraterritorial reach of a number of its laws and regulations and set out below are some examples of these; of course, while the USA is probably the most striking example of such provisions, international financial institutions should be aware of other jurisdictions as well. The examples below are of US laws with potential extraterritorial effect of particular relevance to financial institutions.

The extraterritorial application of US laws has possibly received greatest exposure in the ongoing saga involving attempts by the US Internal Revenue Service to oblige the Swiss financial institution UBS to disclose the names of account holders alleged to have engaged in tax evasion involving the use of Swiss bank accounts. UBS faced the unenviable dilemma of choosing between disobeying disclosure orders in the USA and breaching Swiss banking secrecy obligations. Although the dispute is reaching resolution following the intervention of the Swiss authorities, the matter has been complex and difficult for UBS.

Sanctions

The International Emergency Economic Powers Act, Trading with the Enemy Act and related Off ice of Foreign Assets Control (OFAC) regulations implement economic sanctions against certain identified countries and groups (loosely regarded as being, or as being associated with, traffickers in narcotics and/or terrorists). The sanctions bar business activities, including financial activities such as fund payments and transfers, unless these are licensed. An example particularly relevant to banks involves the clearing of US dollars for, or on behalf of, a sanctioned country, entity or person.

Until relatively recently non-US banks were unlikely to be affected by these provisions as non-US persons and entities not subject to OFAC's prohibitions (such as a non-US bank operating outside the USA) could not be sanctioned for violating OFAC's prohibitions, although they could (often unknowingly) cause violations by US dollar clearers.

Introduction

As we are told in the School Library Commission Report School Libraries: a plan for improvement, ‘One of the key agencies which school libraries and school library services could and should be working more closely with is the public library’ (Douglas and Wilkinson, 2010). Stockport Public Libraries was pioneering in offering a structured programme of class visits across the borough and has worked closely with schools to deliver these. This chapter describes how working in partnership with secondary school librarians to deliver a new Year 6 class visit, which takes place in the summer term, dovetails naturally into the national Summer Reading Challenge and both informs and assists the transition from primary to secondary school. As Jim Knight MP, Minister of State for Schools and Learners in 2008, said at the launch of the Enjoying Reading project: ‘Children's enjoyment of reading is critical to their life chances but schools alone can't crack this. The Department for Children, Schools and Families believes more joined up working between schools and libraries can make a big difference’ (The Reading Agency, 2008).

The Stockport Libraries perspective

The Stockport Libraries Class Visits programme was developed in 1995 in response to changes in the school curriculum and the need for a consistent offer to schools across the whole borough. Visits are offered to Years 1, 3, 4 and 6 and cover an introduction to the local library, non-fiction books and their arrangement, fiction books and their arrangement, and culminate with the Year 6 visits, which were originally intended to be a recap of what had been learned on previous visits.

Stockport Libraries, the local school librarians and the School Library Service have been working closely together for four years to promote their Year 6 class visits and to begin to use them as a starting-point to advertise the national Summer Reading Challenge, which is, of course, a wonderful opportunity for students to celebrate reading for pleasure over the summer holidays, as well as to encourage them to continue with their reading whilst away from school.