'Rogue traders' are not exactly a new phenomenon, but when their activities eventually come to be uncovered by their bosses, they may have already run up hundreds of millions, or even billions, of dollars in losses.

First came Nick Leeson who brought down Barings Bank in 1995 with trading losses on the futures markets of £860 million or some $1.4 billion.

Now, Société Générale, one of the world's leading banks, is trying to come to terms with how a single rogue trader, named Jerome Kerviel, allegedly managed to lose some five billion euros.

Leeson has been quoted as saying he's not surprised that rogue trading has happened again as it's probably a daily occurrence among the financial markets. However he told the BBC he had been shocked by the size of the alleged fraud at Société Générale.

INSEAD Professor of Banking and Finance Jean Dermine says Société Générale is one of the world leaders in equity derivatives and therefore would be expected to have the most advanced risk management systems.

But these systems are expensive and do not yield tangible benefits, because under normal conditions, when there is no loss, it's hard to evaluate the opportunity cost of such systems. Furthermore, there is permanent pressure and temptation to reduce costs across the board at most banks.

The Société Générale case underscores the inadequacy of internal controls within banks, suggesting that central bank regulators should perhaps play a more active role in controlling the trading books of large banking institutions. However, Dermine argues that relying on central banks alone is not the best solution and pressure should be exercised on financial institutions to do a better job themselves. This may be achieved by increasing disclosure of information and asking banks to disclose at the end of the year operational losses which could include all such trading losses, Dermine says.

Craig Smith, INSEAD Chaired Professor of Business Ethics and Corporate Responsibility, who has recently published a paper called 'Why managers fail to do the right thing: an empirical study of unethical & illegal conduct', is puzzled by the absence of moral constraints on Jerome Kerviel, who took big bets with somebody else's money and should have known it was wrong.

Among Kerviel's alleged excuses for violating the rules of the bank was the claim that 'others' were doing the same. This is a standard way of denying responsibility for one's own actions, Smith says.

However, had Kerviel made a profit for his bank instead of a loss, would his actions have been rewarded rather than sanctioned?

Dermine is convinced that, irrespective of the potential loss or gain of Kerviel's positions, the bank would have been under the obligation to dismiss him as soon as they discovered his unauthorised trades. This fact alone makes one wonder then why Kerviel pursued these for so long, since he would not have been able to disclose to his bosses that he had been taking unauthorised positions, even if the trades had made large profits for the bank instead of huge losses.

With the results of the investigation still pending, Craig Smith suggests however that the huge ambition of an outsider (Kerviel), not having attended a Grande Ecole (one of France's top schools), combined with a corporate culture which is perhaps too focused on profits, are potentially factors to be considered when trying to understand what really happened at Société Générale.