Decision IntelSilicon Valley Bank
Silicon Valley Bank Collapse
Estimated impact: $209B
SVB collapsed after a bank run triggered by unrealized losses on its long-duration bond portfolio. Management had concentrated deposits in the tech/VC sector and invested heavily in long-term treasuries and MBS without adequate interest rate hedging, anchoring to the prolonged low-rate environment.
Decision context
Whether to hedge interest rate risk on the held-to-maturity bond portfolio or maintain unhedged positions as rates began rising rapidly in 2022.
What the record already said
The document below predates the decision. Everything after it is read from that document alone, so a reader can check each line against the words above it rather than take the reading on trust.
SVB's Q4 2021 earnings commentary emphasized the bank's strategy of investing incoming deposits into high-quality long-duration agency MBS and Treasuries with the expectation that its tech/VC deposit base would remain stable. Hedging of interest-rate risk on the held-to-maturity portfolio was explicitly described as unnecessary given the rate outlook. The bank operated without a Chief Risk Officer for eight months in 2022.
Source: SVB Financial Group Q4 2021 earnings call and 10-K; Federal Reserve SVB Review (April 2023)
What a reader could have found without knowing the ending
- Held-to-maturity book extended to 5.6-year average duration with no interest-rate hedging
- ~90% of deposits uninsured (above FDIC $250K limit), concentrated in a single industry
- No Chief Risk Officer in place from April to December 2022
- 2021 deposit growth of $87B (doubling) was assumed to be durable despite tech-sector cyclicality
- Federal Reserve supervisors had flagged issues but ratings actions lagged
DI would flag two compounding decisions: (1) extending HTM duration to 5.6 years during a near-zero-rate environment without hedging was a classic recency-bias mistake — treating a decade of low rates as permanent. (2) The concentrated uninsured deposit base meant a run was a single-industry event away. The vacant CRO seat through most of 2022 is a governance signal that reliably precedes crisis.
Written after the outcome was known. Nothing here can be falsified, which is why it sits below the document rather than above it.
Decision anatomy
Red = risk factor present · Green = protective factor present
Biases present in the decision
★ Primary driver · Severity estimated from bias type and decision outcome
Toxic combinations
The curated library this case sits in
Across all 155 curated case studies in our library, by documented outcome:
The library is curated toward documented failures, so this split describes the library, not the base rate of deals. The case above is one row in it.
Lessons learned
- Anchoring to a decade of near-zero interest rates caused management to treat rising rates as a temporary anomaly rather than a regime change.
- Concentrated depositor bases in a single industry amplify run risk when that industry faces a downturn.
- Recency bias in risk models that rely on recent low-volatility periods systematically underestimate tail risks.
Source: Federal Reserve Board Review of the Federal Reserve's Supervision and Regulation of SVB (2023) (Case Study)
These patterns were flaggable in Silicon Valley Bank's own record — before the outcome.
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Workflows that fire on decisions like Silicon Valley Bank’s
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