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Chatham Financial discusses how to mitigate key person risk and boost resiliency in a NeuGroup session

January 20, 2022


The question of how to mitigate so-called key person risk as treasury teams grapple with high turnover and difficulty filling open positions surfaced among members at a fall meeting of NeuGroup for Mid-Cap Treasurers.
In another Chatham case study, the treasurer and the FX risk director of a fast-growing company with a significant international footprint resigned in the same week. Management tapped Chatham to “keep the lights on in the risk management program” while it found the “right replacements” and strategically thought through treasury’s resiliency. Then the pandemic hit, accelerating strategic changes aimed at ramping up the staff’s capabilities.
  • The broader context of the conversation was a session where Chatham advisors reviewed the key components of risk management—strategy, operating model and technology—and discussed case studies of companies rethinking those areas to build resilience in corporate finance in the wake of the pandemic.
  • Among the questions Chatham suggested corporates ask in addressing operating model resiliency is, “Do I have key person risk?” The answer for some members is clearly yes.

Relentless turnover. One Chatham client saw a string of key FX personnel depart, leaving no playbook for FX balance sheet exposure gathering or hedge execution, and a system relying on multiple platforms through the hedging life cycle. The company used the experience to take a proactive stance and rethink its treasury program and avoid a Band-Aid approach in the future.

  • By using Chatham to fill in temporarily the gaps left behind, it gained a fresh set of eyes to review the program workflows and trading thresholds.
  • It established steady FX daily trading and reporting coverage, documenting key activities and recommending process improvements. Documentation of processes and controls reduced the time to onboard new team members.
  • The company established a long-term staffing plan by aligning activities with expertise and employees’ capacity, conducting interviews to vet treasury candidates and support existing staff.

Our expertise for corporates

Chatham provides the knowledge and expertise needed to manage the financial risk associated with interest rate, commodity, and foreign exchange volatility. We develop and implement hedging strategies for hundreds of public companies annually, based on deep and productive banking relationships, giving us market data and insights to enable you to secure the best pricing and terms. Our goal is to empower you to strengthen your financial position and support your company’s financial objectives.

With expertise across hedge accounting, regulatory compliance, valuations, and hedging transactions, we can support all aspects of financial risk management. Our ChathamDirect platform provides convenient workflow, robust analytics, and comprehensive accounting methodologies, supported by our unmatched commitment to client service. This unique combination of strategy, operations, and technology will empower you to run a best-in-class hedging program.