My lesson in risk management

I have always been supportive of the second go: giving the honest company which gets into financial trouble another chance. It is part of the culture in the United States and something we are not very good at in Australia.

But a recent event has made me question the very laws I have supported. In fact, I feel like a mug. I’ll tell you why.

Recently, the Finance & Treasury Association went into administration owing $150,000 to creditors. Yes, it’s a small amount. But how ironic that the FTA should go broke when they are set up to represent treasury and financial risk managers at Australia’s largest banks and companies.

I mean, it’s a bit like a marketing company collapsing because it is poor at marketing. Or a search company that can’t be found on Google. Or a web development company that has an appalling website…OK, maybe that’s not a good example.

Anyway, this not-for-profit, set up to advise companies on financial risk, owes us $25,000 and we haven’t seen a cent of it.

After it collapsed, the administrators were hopeful we might get 100c in the dollar. Then it emerged that the best we could hope for was 40c, which at least will give us about $10,000.

So we duly vote for a deed of company arrangement, as we are told that this is apparently our best chance for us and others of ever getting anything. If we don’t? The FTA will be wound up and we won’t see a cent.

So while we are patiently waiting for any money to be paid, out of the blue, comes a missive from the very same FTA, announcing its 2009 conference which is traditionally its big profit spinner. It is to be held in October and is called “Dollars and Sense – Treasury Management in Turbulent Times”.

I kid you not. The program will include:

• Recent lessons learnt from the GFC for corporate treasurers
• Setting balance sheet strategies to endure business cycles
• How to position your company for the recovery
• Finding certainty in raising capital – both debt and equity

The confirmed speakers control the purse strings at some of Australia’s largest companies. So it looks like business as usual for the FTA. But will we see any money from it?

Not on your nelly.

So at the Octoberfest, while all those treasurers are hob-nobbing over morning tea after a riveting session on risk management, I hope they spare a thought for the poor creditors of the FTA who have learnt a painful lesson.

No matter how well known the board, no matter how reputable the institution – who would think the FTA would go broke – you may still not get your bills paid.

Come to think of it, I have a lot to say on the topic of risk management… wonder why they wouldn’t ask me to speak?