May 15, 2025
Har.com recently published an article featuring Mark Williams, Master Lecturer of Finance, discussing how historic bank failures in 2023 have highlighted the dangers of poor risk management practices, especially in a rising interest rate environment.
Some banks made costly mistakes by overexposing themselves to risky sectors like tech and crypto, investing in long-term bonds when rates were low, and assuming rates wouldn’t rise. When they did, losses mounted, and panic triggered classic bank runs. Experts say individual investors can learn from this: diversify across asset types, industries, and geographies, and avoid concentrating too much in any single investment—be it a stock, crypto, or even cash.
“Each of the failed banks focused on a risky, concentrated customer segment, quickly grew deposits, converted these funds into loans and bonds when interest rates were low, and assumed interest rates would not quickly rise,” Williams adds.
A strong emergency fund and a resilient plan that accounts for uncertainty can help you stay on course, even when others panic.