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Risk Management at NCFERisk Management at NCFE

The Risk Management JourneyThe Risk Management Journey

Graeme WalkerDirector of Business ServicesDirector of Business Services

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The journeyThe journey

“The NCFE journey has been one ofunprecedented growth in the last fewyears, in a heavily regulated marketplace,y y g pwhere risk management has played a bigpart in driving that commercial growth”p g g

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I want to tell you a story…….I want to tell you a story…….

• May 2008…..disaster strikes

• Business unprepared

• Close to business collapse

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What is NCFEWhat is NCFE

• An “Exam Board”

• Fastest growing

• 600,000 learners

High technolog dependence• High technology dependence

• An Amazon

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The way we used to manage riskThe way we used to manage risk

• No Board visibility

• An operational risk register

• Back ups – occasionally

Part time risk strategic risks• Part time risk strategic risks

• Some insurance

• and….

• ……not much else

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IT risks – DR and BCPIT risks DR and BCP

• Get the basics done first

• The first practical things to fixThe first practical things to fix

• A back up strategy

• Replication, replication, replication

• Full Business Continuity Plans

• And lots of exercise

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I have seen the lightI have seen the light

• Its not a cost

• Strategic risk management has clear commercial benefits

• Risk management helped NCFE win 2 major national contractswin 2 major national contracts

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A wise man saidA wise man said

• Growing recognition at NCFE of the strategic significance

• If you want to get something past your Board mention risk

• Risk management adds value

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Help I need somebody……helpHelp I need somebody……help

• How did we professionalise NCFE’s approach

• Business Continuityy

• The IRM

• Training courses

C lt t• Consultants

• An investment

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How we are going to do thisHow we are going to do this

• Set up Audit and Risk Committee

• Created Terms of Reference

• Internal audit

C lt h• Culture change

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Do it this wayDo it this way

• Risk Management Policy

• External pressure - OFQUAL conditions of recognitiong

• Company wide visibility

• Microsoft Dynamics – practical steps

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A new Risk Register is bornA new Risk Register is born

• A video not a snapshot

• More sophisticated impact and likelihood scoring

• Regular review

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Pictures as well as wordsPictures as well as words

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It will never happen…..will it ?It will never happen…..will it ?

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But if it did………..But if it did………..

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Management TeamworkManagement Teamwork

• Now getting beyond the basics

• Risk Attitude

Making risk part of management• Making risk part of management

• Decision making framework

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Now involve the whole BoardNow involve the whole Board

• To influence strategic decisions

• Board balanceBoard balance

• Difference between Exec an Non ExecNon Exec

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I can’t tolerate thatI can t tolerate that

• A new level of sophistication

• Still a work in progressStill a work in progress

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Tolerance directly impacts strategyTolerance directly impacts strategy

STRATEGIC THEMES Comments Current performance Target performanceDate

Worst tolerable outcome Best realistic outcome Key Risk Indicators

Engaged staffRetention of skilled and committed staff (through staff survey)

87% Is current performance tolerable for next year? If not, what is the worst tolerable outcome?

How aggressive is your target? Could it realistically be even better?

1st Staff Survey2nd Attrition rates 2nd Productivity rates

Improving the capability of staff (through training / education / etc)

Is current performance tolerable for next year? If not, what is the worst tolerable outcome?

How aggressive is your target? Could it realistically be even better?

1st No. and type of training courses made available

Valued customersImproving the satisfaction of existing customers (through customer survey

53% Is current performance tolerable for next year? If not, what is the worst tolerable outcome?

How aggressive is your target? Could it realistically be even better?

1st Customer survey

Growth and development?% increase in new customers through organic growth (market share)

6% Is current performance tolerable for next year? If not, what is the worst tolerable outcome?

How aggressive is your target? Could it realistically be even better?

1st Demonstrable measure of position in market share2nd No. of complaints / other service quality measures

?% increase in capability and skills through acquisition (moving NCFE into 'premiership)

* Is this to do with new products / to extend out of vocational courses or just to expand what you already do?* Is this also about % increase in new customers through acquisition

Is current performance tolerable for next year? If not, what is the worst tolerable outcome?

How aggressive is your target? Could it realistically be even better?

Maintain profit margin at * Which means growing with no 27% Is current performance tolerable How aggressive is your target? 1st Normal financial tracking / p gapproximately 27%

g gdrop or gain in efficiency* Is this before or after tax?

pfor next year? If not, what is the worst tolerable outcome?

gg y gCould it realistically be even better?

gmanagement measures

RegulatoryMaintain or reduce number no. of Ofqual complaints to keep Ofqual AAA rating

Is current performance tolerable for next year? If not, what is the worst tolerable outcome?

How aggressive is your target? Could it realistically be even better?

* No. of adverse events occurring* Time taken to report to Ofqual (efficiencies)* Media interest

Improve relationship with Ofqual Is current performance tolerable How aggressive is your target? * No of complaints from OfqualImprove relationship with Ofqual Is current performance tolerable for next year? If not, what is the worst tolerable outcome?

How aggressive is your target? Could it realistically be even better?

No. of complaints from Ofqual* No. of compliments from Ofqual

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Risk affects key decisionsRisk affects key decisions

• Pension liability

• Investment strategy

• Property acquisition

B dgets• Budgets

• Product development

• ……and……

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Current risks – full circleCurrent risks full circle

• IT back on the agendaIT back on the agenda

• Cyber risks

• Physical security

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What we’ve learnedWhat we ve learned

• Risk management adds value

• Risk management isRisk management is commercial

• Involve everyone• Involve everyone

• It influences the Board

• Its been a vital part of the development of the company

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Comments and questionsComments and questions