Enterprise Risk Management - National League of Cities€¦ · · 2018-01-03What We Are Not...
Transcript of Enterprise Risk Management - National League of Cities€¦ · · 2018-01-03What We Are Not...
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Enterprise Risk Management Scott Moss, CIS P/C Trust Director Megan Chorlton, MIABC Director of
Member Services
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Outline
! ERM Frameworks ! Why CIS is Involved in ERM ! CIS ERM Efforts ! Risk Register and Ranking ! Risk Map ! CIS ERM Next Steps
! DART ! Challenges ! Outcome Improvements
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What We Are Not Talking About
! Not a class in ERM ! Selling ERM ! Capital Modeling ERM
‒ Solvency II ‒ Own Risk Solvency Assessment (ORSA)
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ERM Frameworks
! RIMS Maturity Model ! UK, Canada, Australia standards of ERM ! COSO ! ISO 31000 (CIS follows this model)
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ERM Framework 1. Establish the internal
and external context 2. Risk assessment 3. Risk treatment 4. Monitor results 5. Communicate and
consult with internal and external stakeholders
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Why Is CIS Involved in ERM?
! Be an example for members ! Good management ! Framework for decisions ! Explicitly address uncertainty ! Desire to continually improve ! Destined to be the future of risk
management
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CIS ERM Efforts
1. Requested $10,000 from Board in May 2012 to develop a member-focused ERM program.
2. Bickmore prepared feasibility study on implementing ERM for members in a pool environment.
3. August 2012 Board meeting: Presented Bickmore’s work and discussed ERM for members.
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CIS ERM Efforts
4. Management retreat focused on internal and external cultures and SWOT analysis.
5. Dec 2012: Changed focus of ERM from
members to pool. Board passed ERM risk management policy.
6. Board authorized an ERM/
Capital Modeling Project
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CIS ERM Efforts
7. February 2013: Introduced members to ERM principles at CIS Annual Conference
8. March – August 2013: Issued RFP
for capital modeling and selected PriceWaterhouse Coopers
9: Prepared Risk Register
& Ranking
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Risk Register & Ranking
" Governance " Operational " Public Image " Compliance " Technology " Hazard " Human
Resource
" Financial " Business Model " Political " Competition " Underwriting " Reserving/Claims " Reinsurance
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Risk Map
Financial Business Model Political Competition Underwriting Reserving/Claims Reinsurance
Governance
Public Image
Finance
Economic
Bus. Model
Political
Competition
Underwriting
Reserving
Reinsurance
0
1
2
3
4
5
6
0 1 2 3 4 5 6
CIS Risk Map
Impact/Severity
Like
lihoo
d/Fr
eque
ncy
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CIS ERM Continuing
1. Assign “Risk Owners”
2. Develop Mitigation Plans for each risk
3. Establish “Early Warning Indicators”,
Benchmarks, and Dashboards for each
risk
4. Using ERM Decision Model in
major decision
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Decision Assist Risk Tools (DARTs)
Member-focused ERM services and tools:
! ERM Framework
! ERM Consulting
! Executive Risk Management Team
! Sample Risk Registers
! Sample Risk Mitigation Plans
! Sample Monitoring
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Challenges
! Definition of ERM not consistent
! Does ERM “fit” in public sector?
! Board understanding value
! Members not having the resources or desire to practice ERM
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Challenges
! Cutting edge for pools in US
! Not required by auditors or regulators
! Results are unclear
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Outcome Improvements
1. Enhance skills to make decisions with opportunities and threats.
2. Formal risk owners and risk mitigation plans.
3. Better monitoring of risks with early warning flags, benchmarks, and dashboards.
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Why is the MIABC involved in ERM?
Because it was required by our regulator.
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MIABC ERM Process
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MIABC ERM Framework
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MIABC Working Groups
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MIABC Mitigation Plans
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Challenges
# Staff and Board commitment to and understanding of ERM
# Initial progress slowed down
# Quantifying risk rating and measuring progress
# Continued monitoring and assessing
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Outcomes/Benefits
# Changed our approach - more proactive with respect to risk management
# Identified areas of concern that needed to be addressed
# Focused resources and efforts
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Outcomes/Benefits
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Outcomes/Benefits
# Broke down silos and fostered a more cooperative workplace
# Identified risk of activities not undertaken
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Just around the bend…
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MIABC Risk Management Plans
Goal: To assist members to develop and implement liability/property risk management plans
To foster connections among MIABC members
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MIABC Risk Management Plans
How: Individualized Risk Management Plan Handbooks
Regular Peer Group Meetings
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Closing
“Risk management needs to be interwoven into all aspects of a firm’s business and should be a part of the calculus of all decision-making.”
— Dr. Randall S. Kroszner Governor, Federal Reserve Board
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Contact Information
Scott Moss CIS P/C Trust Director [email protected] 503-763-3800
Megan Chorlton MIABC Director of Member Services [email protected] 604-449-6348