DC Area CFOs Discuss Effective Risk Management At UVA Darden Strategic CFO Roundtable

CFOs from leading companies in the Washington, D.C., region discussed the “do’s and don’ts” of enterprise risk management (ERM) during a recent Strategic CFO Roundtable forum led by the University of Virginia Darden School of Business Institute for Business in Society.

Convened by the Darden School at CEB headquarters in Arlington, Virginia, former Capital One Financial Corp. CFO Gary Perlin led the roundtable in a discussion titled A CFO’s View of Risk Management: What It Should Be, What It Shouldn’t Be and How It Can Work.

Perlin said CFOs need to weigh not only the risks, but also potential returns, when making financial decisions. While different business departments may focus exclusively on either liability or growth, he said the job of the CFO is to consider both.

“The job of the chief risk officer (CRO) is to think about worst case scenarios, while the role of the CFO is to ensure that the company’s financial statements are sound and in accordance with accounting standards,” said Perlin.

Drawing on his past experience, Perlin said, “The CRO was the best-placed executive to assess whether our risk positions remained in line with our corporate risk appetite, especially when those decisions were made by disparate parts of the company and as the overall risk environment changed appreciably. My role as the CFO was to make countless risk-return tradeoffs, mostly in real time.”

Perlin added: “In the end, we developed a highly workable approach that ensured that our balance sheet was presented in full accordance with accounting standards and that the company’s capital position was adequate to cover any unexpected losses.”

Reviewing charts provided by Perlin, the CFOs discussed the various characteristics of effective risk management and functional ERM processes. Insights from this roundtable are available in the report “Views from the C-Suite”.

The next quarterly Strategic CFO Roundtable will convene in September 2016.

Roundtable members are CFOs at publicly traded and private companies from the Washington, D.C., region, representing industries such as aerospace and defense, financial services, media, professional services, retail, and technology.

In 2009, Darden Professor Kenneth Eades and Jane-Scott Cantus, principal member of ILEX Leadership Associates, established the Strategic CFO Roundtable. In 2013, the Strategic CFO Roundtable was adopted as an initiative of the Darden School.

About the Darden School of Business Strategic CFO Roundtable

The Strategic CFO Roundtable is a quarterly convening of leading chief financial officers in the Washington, D.C. metropolitan area to discuss, debate, and share best practices for enhancing the strategic role of the CFO. With over 300 years of collective strategic financial and leadership experience, the roundtable members share their views on the challenges and opportunities facing their companies, the economy and society as a whole.