1. MODULE 10
Risk Management
Lecturer:
Peter Moreira, MBA, CGA

2. ENTERPRISE RISK MANAGEMENT
risk management is integral part of government strategic planning which requires
enterprise wide approach
use of risk assessment models
understanding barriers to good risk management
risk is uncertainty that surrounds future events and outcomes
expressed as likelihood and impact of an event with potential to influence achievement of objectives
ERM in government refers to an integrated approach to identifying and managing risks in the public sector
designed to embrace entire enterprise of organization including mission statement, objectives, operations, delivery and performance
Increased prevalence has led to ISO certification of in this area of business, i.e. ISO 31000

3. Integrated Risk Management Framework (TBS)
practical guide for assisting public servants in decision making and overall management of strategic risk
applies to risks that are internal to government and can be controlled through various strategies, policies, and procedures
also applies to risks external to government (natural disasters) that are less controllable
risk management in government is important because it helps management and employees to avoid or curtail unwanted events by reducing likelihood and severity

4. Risk Categories/Possible Losses/Possible Strategies
Natural hazards
Contracts and legal relationships
Financial operations
Misconduct by public officials
Laws or regulations
Economic conditions
Dependence on outside suppliers
Property loss
Use of technology
Workforce

6. government business risky business (health, environment, social policy, security and protection, finance) and alternative to risk management is risky management which can lead to mistakes that erode credibility and legitimacy of government
government decision to contract with private sector to construct bridges or entertainment facilities involves risks whether done on time, within budget and in accordance with plans
government decisions to deregulate/devolve public activities such as municipal water testing and water supply, child care and probation services involve health and security/protection risks

7. RISK MODEL DEVELOPMENT
many parties (departments, agencies, public servants, politicians, outside stakeholders) interest in issues so risk model provides strategic way addressing management of risk
Integrated Risk Management Framework
Developing Corporate Risk Profile (Risk Identification)
departmental risks identified through environmental scanning
current status of risk management within organization assessed
overall departmental risk profile identified.

8. Establishing Integrated Risk Management Function (Assessment)
management direction on risk management communicated, understood and applied
approach to operationalize integrated risk management implemented through existing decision making and reporting structures
capacity built through development of learning plans/tools
Practicing Integrated Risk Management (Responding - Risk Strategies)
common risk management process consistently applied all levels
results risk management practices all levels integrated into informed decision making/priority setting

9. Ensuring Continuous Risk Management Monitoring and Learning
tools/methods applied (control, avoid, transfer, share)
communication with stakeholders ongoing
Ensuring Continuous Risk Management Monitoring and Learning
supportive work environment established where learning from experience valued and lessons shared
learning plans built into departmental risk management practices
results of risk management evaluated to support innovation, learning and continuous improvement
experience and best practices shared internally and across government

10. RISK MANAGEMENT IN PUBLIC ADMINISTRATION
most public sector organizations initial stages of developing integrated risk management framework
federal OAG identified factors to successful implementation of integrated risk management in administration of programs
senior management support
common strategy and framework
clearly assigned responsibility for implementing integrated risk management
taking continuous approach to risk management

11. STRATEGIES PUBLIC PRIVATE PARTNERSHIPS
public-private partnerships imply “sharing” and undertaken to improve service, increase efficiency, share financial risks, save costs
types of partnerships
collaborative e.g. community facilities (MTS Centre), infrastructure (Confederation Bridge)
consultative (information seeking/sharing) e.g. devolution of social services

12. P3s help government manage risk
contributory (financial support/sponsorship) e.g. industry financial guarantees, EI training programs
operational (work sharing) e.g. garbage/snow removal, education co-op programs
P3s help government manage risk
transferring part of risk such as financial to another partner where can be handled more efficiently and effectively
producing greater clarity in terms of what risks retained by government, transferred to partner or shared between government and partner
assigning risk to party that can manage it most cost effectively

13. new risks introduced by P3s
confusion over who accountable for what
governments clear about types of risks lend themselves to P3s
only partnerships likely to be effective mechanisms for transferring and managing risk considered
taxpayers hold government accountable

14. opportunities to share risks categorized according acceptability of risk and ability manage risk
Unacceptable
resulting risk cannot be shared under any circumstances
e.g. health (H1N1)
Tolerable
opportunities and benefits of proposed activity outweigh risk e.g. MTS Centre
Acceptable with additional controls
risk managed by additional monitoring and follow-up e.g. financial guarantees
Acceptable
risk acceptable given current risk treatments continue e.g. garbage/snow removal

15. STAKEHOLDERS
stakeholders people and organizations with particular interests who may affect, be affected by or perceive themselves as affected by risky situations faced by government
essential to identify relevant stakeholders as important to successful risk strategies
decision makers (TBS, Cabinet)
departments, agencies, other governments
service providers, partners, volunteers
unions, clients, citizens with interests in issues
regulators, politicians, academics, media

16. risk analysts consider factors determining which stakeholders considered by government in developing policies/laws and in assessment and management of risk (Privy Council Office)
What is nature of issue at hand (transportation, health care, environment)?
Who be most (least) affected?
Who involved last time dealt with similar issue?
Where take place?
Over what time period (future generations)?
Who needs be considered to protect public interest?
Who lacks capacity/resources to be heard?
What our legal obligations to consider certain groups? (aboriginals, minorities)?
What commitments made to stakeholders?
Who can and should we ignore?

17. stakeholder analysis
secure stakeholder feedback in monitoring implementation of risk management strategy against objectives and potentially changing risk environment (needs, issues, concerns)
build confidence between government and stakeholders in management and sharing risks

18. CHANGING CULTURE IN GOVERNMENT
traditional risk adverse culture of public service often inhibited innovations
increasing demands from citizens, private sector, academics, politicians and public servants to change culture of government be more efficient, effective and responsive (NPM)
customer/client service delivery (technology)
client satisfaction and service standards
privatization
accountability and transparency (performance management)
public-private partnerships (financing, construction, operation of facilities)

19. healthy risk management culture
politicians and senior public servants play important role in influencing perception and handling of risks/innovation within departments
healthy risk management culture
clarity of mission in organization
trusting staff that nurtures team building
positive expectations from employees that results of efforts translate into success
streamlined procedures ensure those in place truly necessary

20. Module Review
Identify risk and risk management, and design a risk management cycle. (Level 1)
Review the principles and processes of risk management and identify elements of a suitable framework for enterprise risk management. (Level 1)
Identify the categories of risk, and evaluate the use of public-private partnerships and other alternative service-delivery arrangements for managing risk. (Level 1)
Determine what stakeholders to involve in a decision-making process, and how to involve them. (Level 2)