The Diamond Affair: When the keyboard becomes a financial risk
The affair involving Meli and Liel Yahalomi and the Bank of Jerusalem serves as a stark reminder of how quickly digital information can trigger financial risks. In an era of instant transactions, trust is a critical asset.
The affair of the disappearance of Meli and Liel Yahalomi involving Bank of Jerusalem, accompanied by partial information and speculations that moved quickly on the network, provides an important reminder of one of the major changes that the world of financial risks has undergone in recent years. Sometimes a keyboard, a digital channel, a phone, and a few hours are enough to turn information — true, partial, or false — into a real risk.
In the past, a crisis of confidence in a bank developed in a line at the branch. Today, the line is in digital media. Information is distributed within minutes, a decision is made within seconds, and money is transferred with a click. Thus, a new and fast sequence of risks is created: information or disinformation can harm trust; the harm to trust becomes a reputation risk; the reputation risk can quickly roll into a liquidity risk; and if the event expands, it may put business continuity to the test, create contagion to other institutions, and even turn into a systemic risk, and in extreme scenarios, even a global scenario. The collapse of Silicon Valley Bank in 2023 illustrated this well. Technology did not create the bank's weaknesses, but it dramatically accelerated the moment when the loss of trust turned into a liquidity crisis. In a world where information and money move almost in real-time, time itself has become a significant risk variable.
From here, a double lesson follows. The first concerns our responsibility as consumers of information, and certainly the responsibility of the media and influencers. A question is not a fact, and a suspicion is not a finding. When it comes to a financial institution, an unsubstantiated publication is not just a possible harm to a person or a corporation. Under certain conditions, it may itself become a risk factor. Freedom of speech does not exempt from responsibility, and the speed of distribution cannot replace verification. Equally, even correct information, when it is partial, devoid of context, or distributed in a way that amplifies anxiety, may drive behavior with real financial consequences.
The second lesson concerns banking institutions, boards of directors, management, and regulators. Even when information turns out to be partial or a rumor that has inflated beyond its dimensions, the very dynamic created deserves examination. It allows one to ask how the event would have developed if the information had been true, but also — and this is perhaps more important — what would have happened if a large enough public had acted as if it were true. In the financial world, the perception of reality may sometimes influence reality itself. Reputation risk management can no longer be perceived as a secondary field alongside the "real" risks. In the digital world, it may be the gate through which other risks are realized.
Business continuity also cannot be satisfied with scenarios of system shutdowns, cyberattacks, or damage to a physical site. It must also include a crisis of confidence developing quickly on the network, a wave of digital withdrawals, an information or disinformation attack, and possible contagion to other institutions. Such scenarios should be part of emergency drills, stress tests, and recovery plans, and not a marginal clause in the communication plan. Although the event and the reference here concern the banking and financial world, these risks and processes are also relevant to many other industries, and it is right that they also prepare accordingly.
And here one must return to the basics: employee permissions, separation of duties, controls, exception monitoring, information security, reporting and decision-making chain, and the ability to respond and communicate in real-time. The question is not only whether the control will prevent an event, but whether the organization will identify it quickly, understand its meaning, contain it, continue to function, and know how to speak reliably with the public when the network is already noisy. In such an event, silence that is too long may create a void, and this void is filled by others. In the current era, hours are sometimes the new days. A bank can be stable in capital and liquidity and still be required in a short time to deal with a crisis of confidence. Therefore, alongside capital and liquidity cushions, a cushion of trust is also required: good corporate governance, strong controls, operational readiness, reputation management, and the ability to convey reliable, clear, and fast information to the public.
This time, apparently, the mountain gave birth to a mouse. Next time, we do not know what it will be. A good financial system does not need to be alarmed by every rustle on the keyboard, but in a world where information and disinformation can move faster than money, it also cannot afford to underestimate their power.
Yair Avidan is a former Supervisor of Banks, director, and social activist.
