Karl Guha: ‘Zero risk means zero reward’

What does this mean for the relationship between supervisory board members and management? Have lessons been learned?
‘No board is immune to temptation, so you always have to be careful not to get involved in anything that could actually cause problems, scandals, or unethical behaviour. That is part of both the prudential and fiduciary responsibility. Not to mention your moral responsibility. For global systemically important banks such as ING, the distinction between one-tier and two-tier governance structures has become almost irrelevant in terms of liability. Whether you are an executive or non-executive board member, the degree of involvement and participation is the same. The regulators will hold you accountable for any negligence, and rightly so.’

It is said that regulators – and, in a broader sense, the current regulatory climate – are trying to eliminate risk from companies, particularly in the financial sector. Do you agree?
‘The problem is that risk is sometimes framed in almost binary terms in the Dutch public and political debate. The focus on zero tolerance leads some to believe that risk can be completely eliminated. That is a fundamental misconception. You can wish risks away, but you cannot eliminate them or regulate them away. Risk exists and is part of life. For a financial institution or a bank, risk is even the most important product. We buy, hold, and sell risk. Zero risk means zero reward. Ultimately, it comes down to whether we value risk correctly, with some categories of risk to be avoided regardless of price as they can have a fatal impact. As long as you fundamentally understand this and act accordingly, all will be fine.
Many people in The Netherlands view banking as a public service and have insufficient understanding of its complexity and specialized nature. Even if you know what you are doing, it is difficult enough to do it well. Ultimately, you are navigating a very large ship through very stormy waters. I see regulation as a very important and necessary guardrail. You need those guardrails to protect people and institutions, because without them, disasters are by definition going to happen. Is there overregulation? Perhaps, but it is human nature to want to tackle a problem, then go too far, and then have to backtrack.’

Views on stakeholder influence in the European Union differ hugely from that in the United States. Which model do you prefer?
‘In Europe, we are generally interested in broad stakeholder management, which is reflected, among other things, in the right to an employee representative. Americans do not understand this. They immediately associate it with trade unions and hostile relations. That is a fundamental difference in vision. To me, it is not about a right or wrong model, but about what works given the context. Within financial institutions, it is, given the increasing regulatory pressure, a major challenge to fully understand your profession. That is what I focus on. I consider someone's substantive contribution more important than whether he or she is an employee representative.’

Related to this: in the United States, the CEO and chairman of the supervisory board can be one and the same person, partly because this promotes rapid decision-making. What are your thoughts on such a dual role?
‘At JP Morgan, Jamie Dimon is both CEO and chairman of the board in a one-tier management structure, and Citigroup recently appointed CEO Jane Fraser as chair. In the Netherlands or Europe, such a structure would never work, and personally, I do not believe in it either. It is not about those individuals. Nor does it imply that I would not trust myself or you in such a dual role, but it is simply good to build checks and balances into the system. I am not making a judgment, but rather expressing a purist management perspective.’

In the United States and Europe there are also very different views on executive compensation. How do you deal with this as a global company?
‘We operate in a competitive world, and our guiding principle is that people should be compensated fairly and equally. I find the differences between the United States and Europe almost less relevant than those within Europe itself. We should apply the same rules to all companies throughout Europe. Currently, European remuneration policy for financial institutions differs from that for other companies. On top of this, there are specific Dutch elements such as the bonus cap of twenty percent of fixed remuneration, which is five to ten times stricter than the European standard of a hundred to two hundred percent.
This creates a major strategic management problem for us. If you want to retain the best talent in such a competitive sector, you cannot keep telling people they are there for the 'greater good.' If they can choose another country or another Dutch company where these restrictions do not apply, they will go there. Moreover, almost sixty percent of our staff is IT-related. In the tech sector, you compete with companies such as ASML and Philips, which are not bound by our remuneration regulations. This creates enormous pressure.
At the management level, the differences between The Netherlands and all neighboring countries are already significant. Our CEO, Steven van Rijswijk, is in the lowest quartile of our banking peer group, and I am at the bottom of the list. The political argument that someone can always be found to take these roles simply because we did so does not strike me as a strategy. People need to understand that Dutch ownership of ING shares is less than two percent, not a hundred percent. All those other shareholders who have invested capital expect us to perform. I am often asked by major shareholders whether we are creating a risk by holding on to the current domicile with all its additional requirements. Or they put it even more bluntly, asking how the ING board can accept a permanent and avoidable loss in value simply because of choosing The Netherlands as domicile. That is difficult to answer. I do not want to complain, but this is the dilemma we face. Do I have a solution? No. Does it bother me enormously? Absolutely. Am I worried about it? Yes.’

And what do you say to those shareholders? Is ING considering leaving the Netherlands?
‘My message always is: 'No, we are a Dutch company and we are staying here.' But our message in The Hague consistently is: 'We do not want to leave, but please do not make it impossible for us to stay.' That wording literally sums up the essence of the problem.’

A company's culture is often influenced by both formal and implicit power. We all know that too much power can be very unhealthy, but a completely egalitarian way of working is also ineffective. What do you see as the ideal balance?
‘If management or a supervisory board is driven by power, something is wrong. Influencing people to do certain things is inherent to management. Manipulative behaviour is not good and must be addressed. As board member, you must be driven by purpose. If the purpose is very clear to everyone, it creates connection. Why are we here? What is our role as a financial institution towards clients and other stakeholders? And what is our role as a supervisory board in that context? Even then, things can go wrong for all kinds of reasons, such as arrogance, incompetence, carelessness. That is why you need to build in counterbalances and controls.’

You have experience as an executive and non-executive board member. Is there a golden rule for how both parties can work together? And how would you describe your own contribution as a supervisory board member?
‘Working together is about transparency, clarity, and trust. You do not have to agree on everything, but you do have to be transparent. Without transparency, there is little trust. And clarity about who does what is important to prevent misunderstandings or confusion. As a supervisory board member, I contribute three things in particular. Never lose sight of what you really need to do and why you are in this position. Secondly, view everything with a certain detachment and do not take yourself too seriously. In other words, humor helps. Thirdly, the ability to make connections in the right order and from the right perspective. I hope that these three elements form my contribution. Whether that is really the case, you would have to ask my colleagues.’

You have a keen interest in history. Is there a period from the past that reminds you of the current era?
‘This is a time of profound change with many variables and many moving elements: from the impact of technology to climate change and demographic developments. We have seen such periods in the past, such as during the Industrial revolution or major ideological shifts. I have a background in mathematics, so I view life in terms of normalised curves. If you overshoot to either end of the curve, as seems to be the case now, a correction follows. Historically, these corrections often consisted of major disruptions, usually wars or civil unrest. The question is whether we can find a new equilibrium for the current challenges without everything exploding.’

You mention technology as one of the challenges of our time. Given the rapid developments in AI, how can we maintain a focus on people?
‘I am not worried about ING. Sixty percent of our employees are already tech-driven. Some will have to learn new skills, and some will not be able to do so. So, we will in some measure have to recruit a different kind of people. The challenge is how we as a society deal with the shift to a knowledge economy in the long term. Not everyone is equipped for this transition, which raises the question of how we can guarantee employment for everyone. After all, work is not only a source of income but also gives meaning and purpose to our lives.
The agreement we have made with each other is that we will not let anyone fall through the cracks. To maintain this, we may need to rethink our societal constructs. Growth is needed to cover all societal costs, including those of an aging population. IT and AI can offset some of the costs, but then we also need to look at taxation. Where and what do you tax? The current tax system focuses on taxing human labor, while the value created by processes and technologies within a company is taxed relatively lightly. We will have to create a new social and fiscal construct that preserves entrepreneurship and encourages people to take risks, start businesses, and create jobs, without denying shareholders a fair return, while at the same time ensuring that everyone has a safety net.’

Managers often tell me that 'people' are their most valuable asset. Do you think there is enough discussion about people in boardrooms?
‘I disagree with that formulation, because I do not see people as the most valuable asset. A financial institution consists in fact of people, capital, and technology, all of which are connected to the customer, who is the very foundation of our existence.. Therefore, board members must discuss all four of these factors. And they do. Without capital, we cannot exist. If we do not use technology properly, we are done for. If your employees leave, you cannot do the work. If customers do not like you, you will cease to exist. The question of which asset is most important is therefore irrelevant to me. As far as I am concerned, they are all equally important.’

This interview was published in Management Scope 01 2026.