What is Risk Management - Panel Discussion Tony Whitworth Tony Whitworth Vice-President Finance & Vice-President Finance & Resources Resources
Dec 27, 2015
What is Risk Management -
Panel Discussion
Tony WhitworthTony WhitworthVice-President Finance & ResourcesVice-President Finance & Resources
RiskRisk
“The threat or possibility that an action or event will adversely or beneficially effect an organization’s ability to achieve its objectives.”
Need to quantify risk and organize structure to manage.
Risk Management StructureRisk Management Structure
Provost and Vice-President Academicand/or
Risk Management Steering Committee
President’s Executive
Committee
Operational Risk Management Committee
Services
Audit Services
Security Services
Health, Safety &
Environment
Research Services
Risk Management
and Insurance Services
Risk Information and Metrics
Colleges & Units
Student & Enrolment Services
Financial Services
Facilities Management
Services
Vice President (Finance & Resources)
Risk Management Steering Committee
President’s Executive Committee
Operational Risk Management Committee
AuditServices
Security Services
Health, Safety &
Environment
ResearchServices
Risk Management and Insurance
ServicesERM
Policies
Colleges & Units
Student &Enrolment
Services
FinancialServices
FacilitiesManagement
Others
InformationTechnology
Board of Governors
Risk Management CycleRisk Management Cycle
Risk Attitude
Risk Reporting
Risk Management
Risk Awareness
Risk Management Review
Risk AttitudeRisk Attitude
Strategy
Policy
Appetite
Exposure
Tolerance
why and what
how RM operates
risk-seeking/adverse
open/closed
limits
Risk AwarenessRisk AwarenessEnterprise-wide Risk Management (ERM)Enterprise-wide Risk Management (ERM)
Identify/analyse/categorize governance, management, operations, reputation,
resources, finance, strategic Evaluate and rank
Probability, impact
Identify actions Forecast new probability impact after actions Implement actions Accountability
Risk Management ActionsRisk Management Actions
Not only negative (ensuring that bad things are less likely to happen)
But also positive (making it more likely that good things will happen)
Not an end in itself but part of good management & business process for determining & attaining the strategic objectives of the organization
Enables assessment of risk implications in terms of governance, management, quality & reputation as well as resources
Risk Management (RM)Risk Management (RM)
Avert potential misfortunes and disasters
Guard against harm & damage to individuals, infrastructure & reputation
Minimize missed opportunities
Risk ManagementRisk Management
Treatment Avoid, accept, accept but control, reduce,
share Monitor
Periodic, early worry, key indicators, fluctuation
Residual risk
Risk ReportingRisk Reporting
Risk Register Identify/categorize
Evaluate
Assign probability and impact (1 to 5)
Treatment
Appraised
Risk ClassificationRisk Classification
Use probability/impact rankings Impact: insignificant, minor, moderate, major,
catastrophic Probability: rare, unlikely, possible, likely, almost
certain
Identify Most important (red) – critical Moderate (yellow) Least important (green) –not material
ActionsActions
Needed when risk “red”
Identify responsibility /accountability
Status of risk
Measurable
Timeframe
Change over time
U of S Strategic DirectionsU of S Strategic Directions
1. Attract & retain outstanding faculty.
2. Increase campus-wide commitment to research, scholarly and artistic work.
3. Establish the U of S as a major presence in graduate education.
4. Recruit & retain a diverse and academically promising body of students & prepare them for success in the knowledge age.
U of S ExampleU of S Example
Risk: investment returns lower than forecast
Probability (1-5) 3Impact (1-5) 4RedStrategy: reduce, avoid, shareActions
establish BoG Investment Committee establish Money Purchase pension plans increase professional strength in Treasury change endowment spending policy
U of S Example U of S Example (cont’d)(cont’d)
Risk: investment returns lower than forecast
Actions (continued)broader range of investmentschange fund managerscommunicate with donors
Revised Probability (1-5) 3
Impact (1-5) 4
YellowYellow
Accountable: Treasurer
U of S ExampleU of S Example
Risk: failure to recruit, renew, retain faculty
Probability (1-5) 4
Impact (1-5) 5
Red
Strategy: reduce
Actions increase new faculty support change collective agreement promote campus
U of S Example U of S Example (cont’d)(cont’d)
Risk: failure to recruit, renew, retain faculty
Revised Probability (1-5) 2
Impact (1-5) 5
Remains Red
Accountable: HRD/Colleges