During a particularly busy week here at Northwest Federal amid budget planning meetings and the normal course of business, we kicked off our first course in the FARE Framework series.
The key driver of the series is to focus on improving communication on financial topics between departments, and I felt the best place to start was with a discussion about Finance and Risk. These two topics are essentially different sides of the same coin, so it makes sense to address them simultaneously.
The key element in developing this course, and the series as a whole, was to make the course detailed enough to be of value without getting lost in the inherent math that underlies financial concepts. For this reason, the course included the following learning objectives:
- Participants should be able to define the three fundamental principles of finance
a. More is better than less
b. Sooner is better than later
c. Lower cost is better than higher cost
- Participants should understand the relationship between risk and reward
- Participants should understand the role cash plays in financial decision-making as the medium of exchange and be able to understand the flow of the Statement of Cash Flows in financial statements
- Participants should be able to understand the concept of time value of money and its role in financial decision making
What I was most impressed with in this course were the discussions we had around taking on certain types of risk to mitigate other risks. For instance, financial institutions regularly take on interest rate risk to reduce credit and other risks (e.g. 30-year mortgage). There was also a very good discussion at the end of the course around the variables, such as increasing labor and healthcare costs or useful life of an asset, which may impact whether or not to invest in technology or other fixed assets. This topic was perfectly timed to coincide with discussions around capital expenditures for the next year. I even had a participant ask for help building a model that would help justify a project to drive efficiency in his area.
My big take away, based on some of the feedback I received, is that this course and the series as a whole will be a great tool to develop our future leaders at all levels of the organization. I look forward to the second course, Principles of Accounting, which will be facilitated this week.
Learn more about the FARE Framework and my project