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

Questions?Questions?

Thank You