NEW YORK,NY. - December 18, 2008 - While it seems that business leadership is currently in short supply, the lessons for future business leaders are abundant, according to the Aspen Institute Center for Business Education (Aspen CBE) report on the implications of the financial crisis for business education. "A Closer Look: Finance Faculty Reflect on the Financial Crisis," looks at what business schools professors in the area of finance think MBA students should know about the current economic situation to both understand what has happened and to be better prepared to avert potential future crises. Faculty interviewed agreed that, as much as possible, they need to help their students grapple with the causes and lessons of the crisis.

That includes helping them understand the extent to which various causes of the crisis are intertwined-among other things, housing policy, the role of speculators and the extent to which failures at individual banks led to widespread failures of solvency and liquidity, according to John Becker-Bease, an assistant professor of Finance at Washington State University-Vancouver. While students start out eager to place blame, says professor Becker-Bease, they begin to understand that "among all the homebuyers and bankers and regulators and politicians, it's hard to tell who was behaving really foolishly and who just got unlucky."

Thomas J. Nist, Donahue Chair in Investment Management at the Palumbo-Donahue School of Business at Dusquesne Univesity, says that he is encouraging students to consider the kinds of ethical questions involved in financial sales and marketing that have come to the fore in the current crisis, as well as considering the need for business people to take responsible actions and not follow leaders unquestioningly.
Finance faculty agreed that the crisis offers an opportunity for them to reflect on the ways in which they might better prepare MBAs going forward. Many of those interviewed believed that since the crisis was caused in a large part by a breakdown in risk management among individual banks, MBA programs should be better at incorporating teaching on risk management as well as conveying its importance to students. That includes understanding the potential pitfalls of risk management models. "We need to help our students both to understand risk models and understand that they can sometimes go wrong, which is not easy to do, especially if the person teaching has been designing and studying those models," said Dwight Crane, George Fisher Baker, Jr. Professor of Business Administration, Emeritus at Harvard Business School.

Faculty was also in agreement that the question of training students as effective risk managers involves questions of leadership and ethics. "Part of real leadership and accountability has to do with how an individual behaves as a leader when other people don't agree with what he or she thinks," explained Professor Crane.

Faculty interviewed concurred that students need to gain an understanding of the real-world implications of their own professional actions, something that can seem highly abstract, especially in classes that deal with the more quantitative aspect of finance. Sylvia Maxwell, Associate Professor of Management at Simmons College School of Management, proposed that a course on market failures and imperfections be required of all MBA students.

For the complete text of "A Closer Look:Finance Faculty Reflect on the Financial Crisis," go to:
http://www.aspencbe.org/documents/E-newsletter/December%2008/Closer%20Look%20-%20Finance%20-%20Financial%20Crisis.pdf

Other papers in The Aspen CBE Closer Look series, which focuses on issues of importance in business education, can be found at: http://www.aspencbe.org/about/library.html.

The Aspen Institute Center for Business Education equips business leaders for the 21st century with a new management paradigm-the vision and knowledge to integrate corporate profitability with social value. To that end, it provides business educators cutting edge classroom resources and creates peer networks to incorporate social and environmental stewardship into teaching, research and curriculum development. The Center for Business Education is part of the Aspen Institute Business and Society Program an organization dedicated to developing leaders for a sustainable global society.

The Aspen Institute, founded in 1950, is an international nonprofit organization dedicated to fostering enlightened leadership and open-minded dialogue.

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Aspen Institute

The Aspen Institute is an educational and policy studies organization based in Washington, DC. Its mission is to foster leadership based on enduring values and to provide a nonpartisan venue for dealing with critical issues. The Institute has campuses in Aspen, Colorado, and on the Wye River on Maryland’s Eastern Shore. It also maintains offices in New York City and has an international network of partners. For more information, visit www.aspeninstitute.org or follow on Twitter @AspenInstitute.

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