RISK APPETITE IN PUBLIC SECTOR
ORGANIZATION
IRM SOUTH AFRICA REGIONAL GROUP MEETING
DE BEERS;CROWN MINES
11 FEBRUARY 2014
THE EXPERIENCE OF EMBEDDING A CULTURE OF MANAGING
RISK IN THE GAUTENG DEPARTMENT OF HUMAN SETTLEMENT
BACKGROUND – SIZE OF THE ORGANISATION
• Entire Department Staff Complement - 1590
• Budget Allocation Human Settlement Development Grant + Equitable
Share = 4.4 Billion
• Enterprise Risk Management Unit (staff complements)- 12
• Five Regions Tshwane
Johannesburg
Ekurhuleni
Mogale & Meyerton
Westonaria
• Four Urban Renewal Project Evarton
Alexandra
Bekkersdal
Winterveld
BACKGROUND - TONE AT THE TOP
OFFICE OF THE MEC
MEC'S OFFICE
HEAD OF
DEPARTMENT
RISK MANAGEMENT
ENTERPRISE
RISK MANAGEMENT
INFORMATION
SECURITY
CORPORATE
GOVERNANCE
ANTI-FRAUD
AND CORRUPTION
HUMAN SETTLEMENT DEVELOPMENT
CORPORATE SUPPORT FINANCE
GOVERNANCE, POLICY, AND MONITORING AND
EVALUATION
LOCAL GOVERNMENT INSTITUTIONAL SUPPORT
BACKGOUND – RISK UNIVERSE
2009/10 2010/11 2011/12 2012/13 Housing Merged Merged Merged
20 risk exposures 21 Risk Exposures 14 Risk Exposures 8 risk exposures
Budgetary constraints to
eradicate housing backlog. Rapid urbanization,
population growth and in –
migration into Gauteng.
Inability to meet targets for
Human Settlement Projects Inability to meet expected
targets for Human
Settlement Projects
Delays in processing of
payments. Service delivery protest. Lack of Integrated
Information Technology System
Lack of Integrated
Information Technology
System 2 Lack of suitable and well
located land for housing
development.
Lack of suitable and well
located land for human
settlement development.
Housing backlog and rapid
increase in housing
demand
Limited well-located land
for Human Settlement
Development
Inability to manage growth
of informal settlements as a
result of emigration and
immigration into the
province.
Insufficient Budget to
provide and develop
integrated infrastructure.
Difficulty in acquiring
suitable and well-located land
Service delivery protests
Lack of integrated and
coordinated plan between
National, Province,
Municipalities,
Agencies/stakeholders i.e.
Eskom, Department of
Public Transport, Road and
Works etc.
Poor management of land. Lack of integrated cohesive
planning amongst the
spheres of Government to deal with Human Settlement
Fraud and corruption
RISK APPETITE - DERTEMINANTS
• Personalities/People
– Culture & Behavior
– Leadership
– Power
– Decision making
• Business Model and Strategy
– Mandate, Vision, Mission, Structure
• Compliance with Rules and Regulations
• External environment
– Community needs
– Stakeholders needs
– Services Rendered
– Ethos , Values and Batho Pele
– Political will
RISK APPETITE - LEGISLATIVE MANDATE
• Corporate Governance King Report III – Chapter 4 The role of HOD, CRO, Line managers and other officials
• PFMA Section 38 – Responsibility of the HOD
Section 45 – Responsibility of other officials
• Treasury Regulations Sec. 3.2 – Annual Risk Assessment(emerging risks)
Risk Management Strategy which include Fraud Prevention Plan
• Public Sector Risk Management Framework
• GPG Framework - COSO Guideline for Risk Management Processes – Adapt to our own
environment
• GPG Standards & Policy Ensures implementation of ERM and uniformity in the province –
Adopt as is
RISK APPETITE – OVERSIGHT
Oversight bodies Role
Executive Authority –
EXCO/Board
Governance of ERM in Province
Head of Dept.(HOD)/CEO Forum Quarterly reviews Top risks
Audit Committee(AC) Quarterly reviews Top risks
GPG Risk Management Forum CRO meet quarterly – Status on
ERM Implementation
General Audit Services(GAS)-
Internal Audit
Conduct Risk based audit & test
ERM Implementation annually
Auditor General(AG) – External
Audit
Annual reviews
SCOPA Review AG Report on Risk Matters
Public Service Commission Annual review ERM Implementation
National Treasury Test maturity levels (SSP)
National Human Settlement Annual review DORA - Grant
RISK APPETITE LEADERSHIP AND OWNERSHIP
• HOD Understood the need to embed risk management culture – PFMA Sec 38
Mandate for RM processes
He gave unqualified support and priority – “Setting the Tone at the Top”
• MANAGEMENT(DDGs, CD &Directors) Difficult group to convince
Own perception on risk appetite
We had to fight for their time and attention with other departmental
priorities
Rank was critical to them
• CRO Embed risk management to entire organization – Coordination and
Facilitation
Get buy – in from all stakeholders
Empower the leadership and the rest in risk management
RISK APPETITE- STRUCTURES
Risk Man. Committee Sits quarterly, Chaired by HOD Includes
DDGs & CDs
Risk Management Sub-
Committee Sits bi-monthly, chaired by CRO, Appointed
Risk Champions
Chief Risk Officer Facilitates & coordinates the above
RISK APPETITE - INGREDIENTS
Relationship
MANDATE
STRATEGY
OBJECTIVES
GRANT ALLOCATION
BUDGET/ VOTE
TARGETS
HUMAN SETTLEMENT
&
HOW WELL WE SPEND
RISK TORALENCE
Organisational Performance
Aligning expenditure
to set targets
Risk Tolerance
Risk Appetite
RISK APPETTITE – SYNERGY PROCESSES
3. ANNUAL PERFOMANCE PLAN
Risk identified for each
programme and sub-programme;
setting targets
1. STRATEGIC PLANNING
Risk and mitigation measure
identified for each Strategic Goals &
Objective
5 .MONTHLY,QUARTERLY
AND ANNUAL REPORT
Risk Reporting
Risk Management
Statement annual report
Top Management
Commitment
towards risk
Annual Report
Business Processes
Performance Agreement
Annual Performance
Plan
Budget Processes
Strategic Planning
5. BUSINESS PROCESSES
Risk incorporated into:
Business Decision
Business Meetings
Business Function
4. PERFOMANCE
AGREEMENT
Performance
Review on
management of
risks within area
of responsibility
2. BUDGET PROCESSES
Risk Appetite identified in
relation
to strategic Goals &
Objective
RISK APPETITE – IMPACT
• Difficult to quantify risk appetite as service
based organisation
Difficulty in funding risk appetite
• Reliance on how well we perform as an
organisation as per external audit outcome
Difficulty in aligning financial performance to
none financial performance
• Risk and change in our environment – affects
continuity
• Involvement of all stakeholders in housing
value chain is a challenge
WAY FORWARD - BUILDING ORGANASIONAL RESILIENCE
Organisation
Governance
Leadership
Ethics
Conduct
Risk
Management
Internal controls
Performance
&
Reporting