“Our headquarters are situated two blocks away from a major downtown railyard, the central hub of multiple commercial rail lines. If there is a significant train collision — something involving toxic chemicals, and there is a bad spill — we are basically ‘management dark’ for at least two weeks.” This report comes from a CFO who talked (privately) to a colleague of mine (a business consultant) who was, in mid-May 2010, probing about sensibilities regarding corporate-level risk exposures.

I’d wager that this CFO — and others — had not imagined the scenario before then. Let’s just say that it was a moment in corporate management — or call it the growth frenzy — that stopped people cold.

Unsurprisingly, the C-level has, in May-June 2010, been forced to reassess the probability of outsize, long-tail, company-busting risks — which are now making headlines as we go to blog-press on June 16, 2010.

The chairman of BP has just left the White House, after telling President Obama and the world that BP is prepared to suspend (for now) its regular shareholder dividends and put aside $20 billion to pay for cleaning up the worst environmental disaster in U.S. history. Outside experts, meanwhile, are suggesting that the amount BP will have to fork over to stop the oil spill and clean up the Gulf will top the $60 billion mark. Maybe it’s even more. In truth, these estimates, from either side, are no more than a finger in the wind. more

Last week, I got a call from Eric Krell, who also blogs in this space for Business Finance. He had been hired by a professional association to research the question: What will the finance function look like in the year 2020? He figured that because I have spent years writing about the role and people of finance, I’d make a good mark.

I do not opine about finance in the cloud and that sort of thing. But I do, always, wonder about finance/accounting people and their skills sets and how they evolve in response to changing business conditions and investor appetites for risk and reward. more

Financial operations are in the spotlight — really and truly — as early economic recovery unfolds. This area has been getting attention from senior management teams that are adjusting their sights on the following issues:

• As our demand picks up, how will our cash flow patterns change?


• How clear is our line of sight on impending commitments of cash?


• Will key suppliers have the working capital they’ll need to properly ramp up?


• How can we ramp up ourselves without starving our suppliers for cash?


• How well did key customers weather the recession?


• How much trade credit risk can we comfortably carry?


• Can we take more preset payment discounts and save on direct costs?

That last bullet is one of my favorites. According to data gathered by my firm, APQC, a nonprofit business research organization, a shocking number of large companies fail to act opportunistically when it comes to capturing preset early payment discounts. That’s a shame — especially when CFOs and controllers say they’ll keep looking under every rock for another penny of cost savings or another FTE to chop.

more