I attended a timely presentation by Mark Phelps of Ernst and Young Brisbane last week on the risks that boards should be focussing on in the current period of uncertainty in the financial markets. There was anecdotal discussion about credit rationing and cancelling of credit facilities by lenders.

We don’t know whether the current circumstances are a "perfect storm" but boards have to be able to show they made reasonable decisions in their business forecasts.

Here are my take-away points:

• Reassess your risks: look at the certainty of your funding arrangements, your cost of funding, your asset valuations, do you need to/can you change your funding sources?
• Business risk: manage the allocation of your resources and protect your capital, monitor your debt levels, look for opportunities, are there new products or services you can provide?
• Risk management: re-identify your risks especially complex transactions, review your compliance reporting procedures, review the quality of your data on your customers and suppliers, ensure your compliance processes are being followed
• Financial risk: review your provisions, liquidity management, capital
• Legislative and regulatory risk: do you have adequate compliance programs and procedures, have you considered the reputational risk of non-compliance?
• Priorities for boards: review and test your strategies, make contingent funding forecasts, do stress-based modelling, manage your capital and liquidity, identify and monitor operational risks, review your asset valuations, assess your legal and regulatory exposures, check the effectiveness of board communications, review the quality of information you get and whether it is the right kind of information.