With current ethical challenges, is it safe to say Risk Management processes are responsive to an accountable government? CIGFARO- AUDIT &RISK INDABA 19 JUNE 2017 Hombakazi Xalabile

TABLE OF CONTENTS WHAT IS ENTERPRISE RISK MANAGEMENT ERM LIFE CYCLE IMPORTANCE OF ERM ETHICS AND ETHICAL BEHAVIOUR ETHICAL ISSUES CAUSES OF UNETHICAL PRACTICES RISK MANAGEMENT AND ACCOUNTABILITY

ENTERPRISE RISK MANAGEMENT DEFINED Enterprise Risk Management (ERM) is defined by the Committee of Sponsoring Organizations (COSO) as “a process, effected by an entity’s board of directors, management and other personnel, applied in strategy-setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.”

ERM Life Cycle Evaluate Performance Implement Confirm next steps Evaluate options Identify and prioritize risks Goal setting Culture Internal Environment Event Identification Risk Response Control Activities Objective Setting Information & Communication Risk Assessment Monitoring

Why ERM Is Important UNDERLYING PRINCIPLES: Every entity, whether for-profit or not, exists to realize value for its stakeholders. Value is created, preserved, or eroded by management decisions in all activities, from setting strategy to operating the enterprise day- to-day.

Why ERM Is Important ERM supports value creation by enabling management to: Deal effectively with potential future events that create uncertainty. Respond in a manner that reduces the likelihood of downside outcomes and increases the upside.

ETHICS AND ETHICAL BEHAVIOUR A code of moral standards of conduct for what is “good” and “right” as opposed to what is “bad” or “wrong” ETHICAL BEHAVIOUR That what is “good” or “right in the context of governing moral code Ethical behaviour is value driven

Ethical Issues Developing ethical culture Eliminating conflict of interest Enhancing cross-cultural ethics Boosting fraud prevention Aligning risk management to Corporate Governance Equitable action to every shareholder Fostering acceptable values in inter- organisational relationships

ETHICAL ISSUES Unbiased relationship with employees Appropriate disposition to acquisition and use of intellectual property Observance of acceptable standards in finance Adherence to genuineness of proposition in sales, marketing and representation Application of technology for improving human race Effective use of acceptable production and assurance technique

ETHICAL ISSUES Promoting gender equality at work Participating in community development Accepting full responsibilities for its action Prohibition of bribery

Causes of Unethical Practices Greed No Time No Experience Breakdown of control Deficient Education Circle of Influence Poor organisational culture Absence of Requisite Risk Management Gamble Lack of Integrity

Ethics Management Framework

With current ethical challenges, is it safe to say Risk Management processes are responsive to an accountable government?

Risk Management vs Accountability Accountability facilitates good governance insofar as active involvement of citizens in transparent decision making shapes good governance. It is pursuant to this understanding of good governance that citizens have an enforceable right to take an active part in governance and to have public services of good quality. Risk assessments are a tool to gather information and communicate externally eventual obstacles to good administration. Openness increases public trust which is necessary for reform and efficiency.