Risk and Governance: Lessons from SVB and Beyond

Key Takaways
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Run risk scenarios / play table exercises on your biggest risks

1. Start with a clear decision-tree, clearly communicated, on highest risks
2. Grow into quarterly exercises and more mature enterprise risk process as you grow. There is no perfect system but even modest planning will be helpful.
3. Have a clear owner on specific risk areas and know who you will involve and communicate with in the event of substantial risk

Pay attention to cash management forcasts and processes

1. Target 1-2 year forcasts for cash projection and 2-3 year forcasts on operating expenses
2. Hold 2-6 months cash for immediate liquidity across multiple banks
3. Where banking is automated, be smart about what is build in other internal processes or systems

Who you hire and the culture you build makes a difference

1. Treasure is generally not a place to take risks. A treasury leader shold be prioritizing return of capital rather than yield
2. It can be challenging to get early stage founders to focus on long-term risks
3. Creating simple models that show the cost of mitigating risks (e.g., by purchasing insurance) vs. discounted value of a potential loss can help make decisions about things that seem speculative

Diversify banking partners and holdings

1. One main banking partner, a few secondary partners, some additional relationships in case of future lending needs
2. Bank with tier 1 national brands (good for the long term), top tier regional/specialized (hold the cash you need), and community banks and CDs (stagger duration for excess)
3. Regional and community banks can often get to know you better and be willing to invest time in building these relationships

Communicate with your board

1. Your board can bring broader expertise (often sit on other boards)|Board and investors can help you get attention from financial partners
2. Board and investors can help you get attention from financial partners
3. Cash management and treasury risk are always part of board duties and your board should be engaged and attentive to it

Stephanie Peng is Chief Financial Officer at Transcarent. Previously she served as the CFO at Teladoc Health, Senior Vice President of Finance at Livongo Health, CFO of Vida Health, and Chief Accounting Officer and Treasurer at Upwork.
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Kyle Doherty is Managing Director, Investments at General Catalyst—a Venture capital firm that invests in powerful, positive change that endures. Previously, he was Head of US PRivat Investments at Coature Management and a Principal at Morgenthaler Ventures.
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Stacie Faggioli is Chief Financial officer at Swoop Search. Previously, she was Head of Corporate Finance at Stripe, Head of Strategic Finance at Dropbox. and worked in banking and private equity.