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Enterprise Risk
• 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 risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives." Business Dictionary.com
Manningham – 15 Enterprise Risks
• Financial;• Asset Management;• Contract Management;• Legislative Compliance;• Public Health;• Climate adaptability and Emergency Management;• Information Technology Reliance;• OH&S
Manningham – 15 Enterprise Risks
• Fraud;• Planning (Strategic and Statutory);• Infrastructure Investment Provision;• Provision of Services;• Adverse Impact of Changes in Government Policy;• WorkForce Management;• Governance.
Risk Categories
Note: Quite a few Councils use more than one category – Nearly all use Operational – so not included.
Strate
gic
Project
Post -P
roject
Org W
ide
Corpora
teFra
ud
Benefits Realis
ation
Community -C
ouncillor
Emerging
Financia
l
Operational -
CEO
Regulatory
Tactica
l
Governance
0
5
10
15
20
25
Variation
• There was a lot of variation in definitions and structure across Councils.
• Not necessarily a bad thing?
Strategic Risk
• A possible source of loss that might arise from the pursuit of an unsuccessful business plan. For example, strategic risk might arise from making poor business decisions, from the substandard execution of decisions, from inadequate resource allocation, or from a failure to respond well to changes in the business environment. Business Dictionary.com
Operational Risk
• Probability of loss occurring from the internal inadequacies (could also be a failure to identify a risk - RC) of a firm or a breakdown in its controls, operations, or procedures. Business Dictionary.com
Project Risk
• The exposure to a company that arises from taking on a particular task. A project risk can be internal to the business, it can involve external events or it can stem from any other circumstances that can hamper the project's overall success and result in loss or embarrassment to the firm undertaking it. Business Dictionary.com
Financial
• The probability of loss inherent in financing methods which may impair the ability to ensure financial sustainability or provide adequate return. Business Dictionary.com
My Thoughts
• I wanted to look at categories that reflected the structure of the Municipality and that I thought that employees could understand.
MCC Enterprise Risk Management System
Council(Corporate Risks)
CouncillorsCouncil Plan
Objectives
New Services and Projects
Strategic Risks
Municipality(Community Risks)
SocietyImpacts, influences and other risks
Impacts, Influences, other risks
MCC Impacts and Influences
Existing Service and Projects
(Operational Risks)
Corporate
• Is the type and probability of a loss of significant enough proportion to impact and impede the Council’s management structure, operations, legislative obligations, affect Council’s reputation and /or capacity to provide services to the municipality. The consequences of this type of event will generally impact a number of Service Units.
Strategic
• A potential source of loss that might arise from the pursuit of the Council and/or other Plans. The loss could arise as a result of the development of the plan, unknown factors in making decisions, from the execution of decisions, from resource allocation, or from a failure to respond well to changes in the business environment.
Operational
• Probability of loss occurring from internal influences resulting in, failure to meet service standards, injuries to employees or other person/s and/or damage to Council assets, through failure to identify a risk, lack of controls, operations, or procedures over an identified risk within established Council operations and service delivery.
Community
• As it relates to Council objectives, is the potential for a sudden or gradual loss impacting the municipality leading to a reduction in amenity, standard of living, community safety or community health and well being and/or environmental degradation.
Rationale
Operation Risk
Corporate Risk
Service Unit- Controls, monitors & reports- Activities & resources directed at risk
Executive Management TeamMonitors, supervises, allocates resources
Councillors Council PlanObjectives
New Services and Projects
Strategic RisksDriver / Potential for additional Risks
Community Risksor expectations.
Driver / Potential for additional Risks
Assets & Services provided - Justification
Does the Risk have the capacity to significantly impact / impede Council’s management structure, operations, reputation or service delivery by Council?
Does it relate to a emerging risk, new service, project or strategic objective?
Does it relate to an existing service/project?
Is there an existing service targeted at risk?
Is a decision on a new service targeting the risk required?
Community Risk outside Scope of Council objectives.
Corporate RiskYes
Yes
Yes
Yes
Yes
No
No
No
No
No
No
Operational Risk
Strategic Risks
Service?
Yes
Community Risk
No-longer new & retained
(2nd Corp) Significant Consequences
MCC Enterprise Risk Management System