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Most companies by now have well established risk management programs, but Jonathan York, vice president of SunGard BancWare, says finance and treasury departments may be planning for the wrong risks. The trouble, says York, is that people only consider plausible risk scenarios, while the recent collapse of leading financial institutions and the subsequent global credit freeze was a risk scenario almost nobody contemplated. Even now, most treasurers are scrambling to ensure day-to-day liquidity, he says. Understandable, but they eventually must plan for future extreme scenarios. Take, for example, a change in foreign government appetites for U.S. treasuries as a refuge for currency reserves. This, he warns, would result in major shifts in exchange and interest rates, “which could have potentially very negative implications for the U.S. economy.”

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