Risk Powers Performance - AFOA - Aboriginal … Powers Performance. AFOA MB Leadership and Administrators Conference. January 25, 2017 ... New game, new rules. Profiles 10 trends that

Risk Powers PerformanceAFOA MB Leadership and Administrators ConferenceJanuary 25, 2017

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Risk Powers Performance

Whether you are embarking on a new transaction, changing leadership, implementing new technology, or facing industry disruption, risk is ever-present. The upside? Risk also presents organizations with an opportunity to not only protect value, but also to implement value-creating strategies. Are you ready to overcome fear and embrace risk?

AFOA MB Leadership and Administrators Conference - 2017 2


RiskDefinitions and context



Risk definitions

Risk is the chance of something happening that will have an impact upon objectivesRisk management is the culture, processes and structures that are directed towards realizing potential opportunities while managing adverse effectsOpportunity is defined as:

1. a favorable, appropriate, or advantageous combination of circumstances

2. a chance or prospect



Is this person drowning or safe?



Different perspective – safe?



What do you see?



Why Enterprise Risk Management?

• Enterprise Risk Management (“ERM”) is not a new concept. However, organizations in both government and the private sector are experiencing growing pressure to manage their risks effectively

• ERM is the identification and treatment of risks facing a business

• Encompasses all aspects of the organization with the aim of identifying, managing and minimizing risks. Focused on risks at the enterprise level

• Ongoing process that continually updates, refreshes and evaluates new and existing risks across the organization



Objectives of ERM

• Enables the organization to proactively assess and demonstrate whether the organization’s key risks are being properly controlled, and to potentially eliminate unnecessary control related overhead

• Allow management to make/evaluate decisions on a well informed, risk adjusted basis

• Determine accountability/ownership of all key risks

• Improve reputation through reduced frequency/severity of risk events

• Enable definition of realistic tolerances and measures of risk to support reasonable budgeting for risk (expected loss) and allocation of capital (unexpected loss)

• Increase risk and control awareness of all employees, at all levels

• A self sustaining, ongoing process to enable timely, more informed decisions around choices for capital and shareholder value



Overriding objective of ERM

The enablement of individuals, and their departments, to understand risks and to demonstrate the management of those risks, to an acceptable level, at any point in time, in the context of business objectives.



“Its only when the tide goes out that you learn who has been swimming naked”

Warren Buffet



Risk Trends2017 and Beyond




• Risk landscape is changing fast• Constantly evolving – more strategic• Risk is a tool to create value and achieve

higher performance• No longer something to only fear, minimize and

avoid


www.deloitte.com/us/Future-of-Risk


New game, new rules

Profiles 10 trends that have the potential to significantly alter the risk landscape for companies around the world and change how they respond to and manage risk




How are the organization’s responses to risk changing?



Risk Powers Performance1. Cognitive technology

• Driven by developments in artificial intelligence and easy access to huge amounts of data

• Smart systems will assist, and at times replace, human-led risk management (used to detect, predict and prevent risks in high risk situations)

• Systems are self-managing – and potentially self-defending and self-healing against risks−Volume of data, new and advanced AI, greater

pool of talent, and adoption of behavioral analytics in risk management



Risk Powers Performance2. Controls become pervasive

• Smart devices (also known as the Internet of Things (IoT)) equipped with a variety of sensors, communications, and computing capabilities serve as risk monitoring and enforcement points

• Opportunity to detect risk events, derive crucial risk insights, and take immediate action− Growing adoption of workplace wearables,

advancements in sensor technology, increasing investments in the IoT, increased connectivity of sensors and advancements in analytics



Risk Powers Performance3. Behavioral science informs risk

• Study of human behavior – interdisciplinary research across multiple fields of study to try to understand what drives risky behavior

• Attempts to scientifically identify the beliefs of what is acceptable behavior

• Attempts to help leaders overcome the influence of cognitive biases in decision-making

• How can you detect this behavior and modify it?− Growing popularity for decision making (business

advisor), early successes in commercializing gamification, identify vulnerabilities (cyber)



Risk Powers Performance4. Vigilance and resilience

• Focus on vigilance – detect patterns that may indicate or predict risk events

• Focus on resilience – capacity to rapidly contain and reduce the impact of risk events

• Increased monitoring of emerging threats, identifying anomalies in business processes, managing stoppages from third party vendors, and prepare for risk-related workplace disruptions− Greater sharing of information among

organizations (fraud, health or social info), rapid advancements in analytics and capabilities/tools



Risk Powers Performance5. Risk transfer broadens

• Insurance and contracts play a bigger role in the face of “mega impact” risk events like climate change, political unrest, terrorism and cyber attacks

• Increased pressures on organizations to find cost-effective ways to transfer risks

• Pitfall – becoming “over-insured” or purchasing insurance in noncritical areas



How are consequences of risk for organizations changing?



Risk Powers Performance6. Innovation leads regulation

• Regulations are challenged to keep up with innovation – innovation is driving the regulatory agenda

• Blurring of market boundaries• Growing consumer activism and empowerment− Driverless cars, Airbnb and Uber, Telemedicine

(doctors through videoconference)



Risk Powers Performance7. Risk as performance enabler

• Risk perceived as driving performance and value in an organization versus something to fear/avoid

• Encouraging a desired level of risk-taking behavior to balance risk and rewards

• Greater empowerment given to employees to be innovative and be rewarded for taking on risk themselves

• Use of metrics and a culture whereby failure is viewed as necessary to a step to success



How is the onslaught of risk changing?



Risk Powers Performance8. Collective risk management

• More connected that ever before – share data, technology and more (including risks)

• Open, collaborative approaches to identify, manage and reduce risk together− More of a networked ecosystem of businesses,

governments are driving more transparency, social media surveys provide data for risk analysis

− “Bug bounty”, sharing of cyber threat information



Risk Powers Performance9. Disruption dominates

• Increased focus on risks that threaten to disrupt an organization’s strategies and a greater need to prioritize those risks

• Disruptions in the form of emerging technologies, business model transformations, and ecosystem changes will force leaders to make strategic choices

• Traditional industries are converging to create new markets− HBO & Netflix, 3D printing for medical implants

and dental products



Risk Powers Performance10. Reputation risks accelerate

• Information spreads like wildfire – mobile devices, social media, evolving expectations from society

• Upsurge of socially conscious consumers and growing consumer activism is putting pressure on businesses and political leaders− Difficult to manage personal online activity of

employees and this can cause reputational damage to the organization

− May be forced to respond in haste without fully investigating the situation



Risk Game



Contact information


Dailene KellsPartner, Risk [email protected](306) 343-4464

mailto:[email protected]

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte ToucheTohmatsu Limited and its member firms.

The information contained herein is not intended to substitute for competent professional advice.


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Risk Powers Performance - AFOA - Aboriginal … Powers Performance. AFOA MB Leadership and Administrators Conference. January 25, 2017 ... New game, new rules. Profiles 10 trends that