Enterprise Risk with Local

Government

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.

Manningham – 15 Enterprise Risks

Feedback

• Some 30 Councils provided information

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

Council List

Can provide list – for distribution – issue to remove Council name or not

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