What is Risk Management - Panel Discussion Tony Whitworth Vice-President Finance & Resources

Risk  “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 Structure

Risk Management Cycle Risk Attitude Risk Reporting Risk Management Risk Awareness Risk Management Review

Risk Attitude Strategy Policy Appetite Exposure Tolerance  why and what  how RM operates  risk-seeking/adverse  open/closed  limits

Risk Awareness 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 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)  Avert potential misfortunes and disasters  Guard against harm & damage to individuals, infrastructure & reputation  Minimize missed opportunities

Risk Management  Treatment Avoid, accept, accept but control, reduce, share  Monitor Periodic, early worry, key indicators, fluctuation  Residual risk

Risk Reporting  Risk Register Identify/categorize Evaluate Assign probability and impact (1 to 5) Treatment Appraised

Risk 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

Actions  Needed when risk “red”  Identify responsibility /accountability  Status of risk  Measurable  Timeframe  Change over time

U 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 Example Risk: investment returns lower than forecast Probability (1-5)3 Impact (1-5)4 Red Strategy: reduce, avoid, share Actions establish BoG Investment Committee establish Money Purchase pension plans increase professional strength in Treasury change endowment spending policy

U of S Example (cont’d) Risk: investment returns lower than forecast Actions (continued) broader range of investments change fund managers communicate with donors Revised Probability (1-5)3 Impact (1-5)4Yellow Accountable: Treasurer

U 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 (cont’d) Risk: failure to recruit, renew, retain faculty Revised Probability (1-5)2 Impact (1-5)5 Remains Red Accountable: HRD/Colleges

Questions? Thank You