@Risk

A new white paper from Prudential Financial, Inc. offers some valuable advice to CFOs who were left reeling in the wake of the global financial crisis.

“Riders on the Storm: CFOs and the Credit Crisis,” written by Bernard Winograd, chief operating officer and executive vice president of Prudential’s U.S. Businesses, outlines the key lessons the crisis taught us, from both a financing and risk management perspective. I particularly liked the post-mortem analysis of corporate risk management practices, where Winograd lists six steps to help CFOs upgrade the way they handle risk.

Most importantly, he says, effective risk management demands a holistic approach, one that incorporates even previously under-appreciated risks into everyone’s thinking. Only then can we start heading toward a sustainable economic recovery.

“We are all living with reminders of the dividends that effective risk management can pay, and of the depth of the problems that ensue when it is done badly. Many senior finance executives are increasingly focused on risk management across the enterprise, as well they should be,” Winograd writes. “The good news is that there are ways available to diminish balance sheet risks. And, from a macroeconomic point of view, the systemic recalibration of attitudes towards credit and risk that is underway is likely to lay the groundwork for a durable economic recovery.”

These comments echo those from Professor Adrian Done of Barcelona’s IESE Business School, which I posted about earlier. In responding to a global study that revealed a significant disconnect between CFOs and procurement, Done calls specifically for a recalibration of the relationship financial office execs and the company supply chain.

“The subsequent finding that only 46 percent of financial chiefs see real integration between purchasing and finance processes makes this particularly alarming, as it represents a major break between two departments that should be working closer than ever to combat the downturn,” he says.