Risk management proposal

WESTERN CAPE DEPARTMENT OF HEALTH
Risk Management Proposal
Cape Town | Sandisa Sebezo | 4 June 2015

© Western Cape Government 2012 |
Overview
WCG-PPT Slide Gallery-01112012.pptx 2
National Treasury – Public Sector Risk Management Framework
Risk Management : South African & Global Perspectives
Combined Assurance
Situational Analysis
Recommendations
Bibliography

National Treasury
Public Sector Risk Management Framework
WCG-PPT Slide Gallery-01112012.pptx
Risks
Risk Management Functions of Executive Authorities
Risk Management Functions of Accounting Officers
Risk Management Functions of Internal Auditing
Functions of Risk Management Committees
Functions of Chief Risk Officers
Functions of Risk Champions
3

National Treasury
Risks
Risk Management Functions of Executive Authority
4

National Treasury
Risks
5

National Treasury
Risks
6

National Treasury
Risks
7

National Treasury
Risk Identification
Risk Management Functions of Accounting Authorities
8

National Treasury
Risks
Risk Management Functions of Executive Authorities
9

National Treasury
Risks
Identify & Document key risks
Cover all risks – not only risks within the direct control of the institution
Draw as much as possible from inputs from unbiased independent sources
Identify : Strategic Risks, Operational Risks and Project Risks
Identification
Assists to enrich risk intelligence
Help to prioritize important risks
Assessment on the basis of likelihood and impact
Performed through a 3 Stage process : Inherent Risk, Residual Risk and Risk Appetite
Designing control activities to address the risks
Assessment
Critical in order to identify, assess and respond to risks
Communicating responsibilities and actions
Communication &
Reporting
Through ongoing activities and separate evaluations
Monitoring
10

Risk Management Functions of :
11WCG-PPT Slide Gallery-01112012.pptx
Executive Authority
Header
Header
Header
Obtain assurance
from management
Playing an
accountability role
Support
That strategic choices are based on a rigorous assessment of risk
That key risks inherent in the institution’s strategy were identified, assessed and properly
managed
Insisting on the achievement of objectives, affective performance management and
value for money
Assist Accounting O fficer to deal with fiscal, intergovernmental, political risk beyond
direct control

Accounting Officers
Header
Header
Header
Ultimate Chief Risk
Officer
Leadership
Provides Assurance
Accountable for overall governance of risk
Sets the tone for effective risk management by providing support
Devotes attention to overseeing management of significant risks
Holds management accountable
Ensures that actions are taken with regards recommendations from AC, IA, EA and RMC
Approves risk management policy, strategy and implementation plan
To relevant stakeholders that key risks are properly identified, assessed and mitigated

Internal Auditing
Header
Header
HeaderProvides Assurance
Takes Ownership
Conducts
Assessments
Provides an objective, independent assurance on the effectiveness of risk management
Evaluates effectiveness of the entire system and provide recommendations on
improvement
Can assume the role of Chief Risk Officer
Audit Committee could also take on the responsibilities of RMC
Must guard against assuming management responsibilities for risk management
To ensure that significant risks are identified and assessed
To check whether risk responses are appropriate
To check whether risk information is communicated in a timely manner and that it is
properly recorded

Risk Management Committees
Attributes Duties
Appointment Composition
Appointed by Accounting Officer Should be chaired by
independent external person
Comprise of management and
external members
Responsibilities should be formally
defined in a charter
Intimate understanding of
mandate and operations
Ability to act independently and
objectively in the interest of
department
Should have thorough
understanding of risk
management principles and their
application
Review and Recommend : Risk
Management Policy, Risk
Management Strategy, Risk
Management Implementation
Plan and Risk Appetite
Evaluate effectiveness of
integration of risk management
Evaluate the effectiveness of the
mitigating strategies
14

Develops
the
combined
assurance
plan
Analyzing
results of risk
assessments
to extract
risk
intelligence
Reporting
risk
intelligence
to the
Accounting
Officer and
RMC
Facilitating
orientation
and training
of Risk
Managemen
t Committee
Develops risk
management framework
i.e. Policy, Strategy,
Implementation Plan, Risk
Identification, Risk
Assessment Methodology,
Risk Appetite and
Tolerance and Risk
Classification
Develops department’s vision for risk management
Uses specialist expertise to assist embed risk
management
Reports directly to Accounting Officer
15

Functions of Risk Champion
Must never
assume the
role of risk
owner
Intervenes
in instances
where risk
manageme
nt efforts
are being
hampered
by lack of
cooperatio
n or lack of
skills and
expertise
Provides
guidance
and support
to manage
problematic
risks
Good understanding of risk
management
Good analytical skills
Expert power
Leadership qualities
Motivational qualities
Good communication skills
Champions a particular aspect of risk
Plays a catalyst role
16

Risk Management
South African & Global Perspectives
On an “Apply or Explain” basis
The suggestion of independent experts be part of the RMC
comes from here as well
Chapter 4 deals with the governance of risk
The Orange Book provides broad based general principles
on risk management
Combined Code on Corporate Governance – Comply and
Explain Basis
Turnbull Guidance seeks to imbed internal control
South African : King Code III Global : UK
ISO 31000 : Focus Plan –Do- Check and Act
Its purpose is to provide principles and generic guidelines for
the design, implementation and maintenance of risk
management throughout an organization
COSO Enterprise Risk Management Framework : A 3
dimensional model for understanding enterprise risk,
applicable to all industries and encompassing all types of
risks
Dr. Marc J. Epstein - Research Professor at Rice University
Dr. Adriana Rejc Buhovac – Assistant Professor at University
of Ljubljana
FERMA – A Risk Management Standard
Good Practice in Risk Management – Northern Ireland Audit
Office
Audit & Risk Assurance Committee Handbook
Global : US & Australia
Global Works on Risk
Key Fact
Other
Views
17

Risk Management Process

Risk Management Model

Risk Register - Example

© Western Cape Government 2012 | WCG-PPT Slide Gallery-01112012.pptx
Premise Premise
Practice Advisory 2050 – 2 speaks about assurance
mapping as a valuable tool for coordinating risk
management and assurance activities
An assurance mapping exercise involves mapping
assurance coverage against the key risks in an
organization.
This process allows an organization to identify and
address any gaps in the risk management process
and gives
Stakeholders comfort that risks are being managed
and reported on, and that regulatory and legal
obligations are being met.
Practice Advisory 2050 -3 states that the internal
auditor may rely on or use the work of other internal
or external assurance providers in providing
governance, risk management, and control
assurance to the board.
King Code III declares that the audit committee
should ensure that a combined assurance model is
applied to provide a coordinated approach to all
assurance activities
Internal audit should form an integral part of the
combined assurance model as internal assurance
provider.
Internal audit should provide a written assessment
of the effectiveness of the company’s system of
internal controls and risk management
23
Combined Assurance

Combined Assurance Model

Combined Assurance Governance Model

Bibliography
National Treasury, Public Sector Risk Management Framework (2010)
Her Majesty Treasury, Audit & Risk Assurance Committee Handbook (2013)
King Code of Governance principles for South Africa (2009)
Her Majesty Treasury, The Orange Book : Management of Risk – Principles and Concepts (2004)
Northern Ireland Audit Office, Good Practice in Risk Management (2011)
COSO – Enterprise Risk Management -Integrated Framework : Application Techniques (2004)
Dr. Hugh van Seaton, Enterprise Risk Management : COSO, new COSO, ISO 3000 (2012)
Fandy Haristha Siregar, Combined Assurance : Holistic Approach for Organization (2014)
Deloitte, Combined Assurance : Intergrating Role Players to paint the Full Picture
Marc J. Epstein & Adriana Rejc, Identifying, Measuring and Managing Organizational Risks for
Improved Performance

Tel: Fax:
www.westerncape.gov.za
Contact Us
Sandisa Sebezo
Administrative Clerk : Strategic Planning & Coordination
+27 (0)21 483 6626 +27 (0)21 483 3205
Sandisa.Sebezo@westerncape.gov.za
4 Dorp Street, Cape Town, 8001

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Editor's Notes