Murdoch UniversityMurdoch University

RISK MANAGEMENTRISK MANAGEMENT

Senate InductionSenate Induction

RISK MANAGEMENTRISK MANAGEMENT – – Presenter’s BackgroundPresenter’s Background

FIIA, FCPA, Registered Company Auditor, CDFIIA, FCPA, Registered Company Auditor, CD 6 years lecturing & tutoring at Edith Cowan 6 years lecturing & tutoring at Edith Cowan

University University Board of Governors of the IIA for 13 years & Board of Governors of the IIA for 13 years &

presented IIA training courses on “Risk presented IIA training courses on “Risk Management, Introduction to Auditing, Re-Management, Introduction to Auditing, Re-inventing Internal Audit, Operational Auditing”inventing Internal Audit, Operational Auditing”

25 years auditing experience in Government & 25 years auditing experience in Government & Commercial sector and Deputy State Manager of Commercial sector and Deputy State Manager of the Health Insurance Commission in WAthe Health Insurance Commission in WA

PRESENTATION OBJECTIVESPRESENTATION OBJECTIVES

what is Risk ?what is Risk ? what is Risk Management ?what is Risk Management ? who is responsible for Risk Management ?who is responsible for Risk Management ? how do we manage Risks ? how do we manage Risks ? the benefits of Risk Management the benefits of Risk Management accountability for Risk Managementaccountability for Risk Management success factors in implementing Risk success factors in implementing Risk

ManagementManagement embedding Risk Management embedding Risk Management conclusion & questionsconclusion & questions

What is Risk ?What is Risk ?

Risk if unmanaged, may prevent an Risk if unmanaged, may prevent an Organisation from achieving corporate Organisation from achieving corporate goals – it’s what keeps us awake at night !goals – it’s what keeps us awake at night !

Risk is not always a bad thingRisk is not always a bad thing Risk can be strategic or operational Risk can be strategic or operational

Examples of RiskExamples of Risk Political & RelationshipPolitical & Relationship Customer ServiceCustomer Service Reputation/EthicsReputation/Ethics Competition & MarketingCompetition & Marketing Academic Quality Academic Quality Intellectual PropertyIntellectual Property Business ContinuityBusiness Continuity Financial & Fraud Financial & Fraud Technological Technological LegalLegal Asset Utilisation & SecurityAsset Utilisation & Security Human Resource & Industrial Relations Human Resource & Industrial Relations

What is Risk Management ?What is Risk Management ?

Assess the risk = Likelihood * Impact Assess the risk = Likelihood * Impact

Risk Management Options are Risk Management Options are - accept the risk (do nothing)accept the risk (do nothing)- transfer the risk via insurance or contracttransfer the risk via insurance or contract- eradicate the riskeradicate the risk- manage the risk by putting in place risk reduction manage the risk by putting in place risk reduction

strategies strategies

Monitor & Review Risk in priority order & with cost Monitor & Review Risk in priority order & with cost benefit considerations benefit considerations

Initial Risk = Impact * Likelihood = High RiskInitial Risk = Impact * Likelihood = High RiskLessLess : Risk Reduction Processes : Risk Reduction Processes regular preventative maintenanceregular preventative maintenance adherence to speed limitadherence to speed limit attendance at a defensive driving course attendance at a defensive driving course seat belts are always wornseat belts are always worn insurance policy insurance policy

Residual Risk =Residual Risk = Low Risk ratingLow Risk rating

Action RequiredAction Required – Accept the Low Risk level – Accept the Low Risk level

Car Accident RiskCar Accident Risk

Who is Responsible for RiskWho is Responsible for RiskManagement ?Management ?

Everyone ; &Everyone ; &

All the time as the Risk environment is All the time as the Risk environment is dynamic not staticdynamic not static

Risk Management BenefitsRisk Management Benefits

Helps prioritise our limited resources into Helps prioritise our limited resources into the areas of greatest needthe areas of greatest need

Improves our ability to achieve our Improves our ability to achieve our Corporate GoalsCorporate Goals

Represents good Corporate Governance – Represents good Corporate Governance – internal & external benefitsinternal & external benefits

Favourable impact on Insurance premiums Favourable impact on Insurance premiums

Risk Management Reporting ?Risk Management Reporting ?

Each operational area should produce & Each operational area should produce & annually review their plan & “sign off” annually review their plan & “sign off”

Risk Management Plan & Register Risk Management Plan & Register should be annually reported to the Senior should be annually reported to the Senior Executive Group & to the Senate Executive Group & to the Senate

The Audit & Risk Committee will The Audit & Risk Committee will oversight Risk Management activity oversight Risk Management activity

Critical Success FactorsCritical Success Factors

have ongoing support from the Senate & have ongoing support from the Senate & the Senior Executive Group the Senior Executive Group

have ongoing support from the Senate & have ongoing support from the Senate & the Senior Executive Group the Senior Executive Group

have ongoing support from the Senate & have ongoing support from the Senate & the Senior Executive Group the Senior Executive Group

Embedding Risk Management Embedding Risk Management

Risk management belongs to everyone Risk management belongs to everyone and all the time and all the time

The Corporate Plan should deal with The Corporate Plan should deal with Risk (Threats)Risk (Threats)

Project submissions to Senate should deal Project submissions to Senate should deal with Riskwith Risk

School/Divisional papers should deal with School/Divisional papers should deal with RiskRisk

CONCLUSION & QUESTIONSCONCLUSION & QUESTIONSwhat is Risk ?what is Risk ?what is Risk Management ?what is Risk Management ?who is responsible for Risk who is responsible for Risk Management ?Management ?how do we manage Risks ?how do we manage Risks ?benefits of Risk Managementbenefits of Risk Managementaccountability for Risk Management ?accountability for Risk Management ?success factors in implementing Risk success factors in implementing Risk Management Management embedding Risk Managementembedding Risk Management

Murdoch UniversityMurdoch University

INTERNAL AUDIT INTERNAL AUDIT

Senate InductionSenate Induction

PRESENTATION OBJECTIVESPRESENTATION OBJECTIVES

what is Internal Audit ?what is Internal Audit ? what is the role of the Audit & Risk what is the role of the Audit & Risk

Management Committee ?Management Committee ? the difference between Internal & External the difference between Internal & External

Audit ?Audit ? accountability requirements for Internal accountability requirements for Internal

AuditAudit the significance of the Annual Audit Planthe significance of the Annual Audit Plan what are the different types of audit ? what are the different types of audit ? conclusion & questionsconclusion & questions

What is Internal Audit ?What is Internal Audit ?

Audit is the second oldest profession in the worldAudit is the second oldest profession in the world Internal Audit is an independent/unbiased review Internal Audit is an independent/unbiased review

activityactivity Internal Audit has changed from being a Internal Audit has changed from being a

“bloodhound” looking solely at financial “bloodhound” looking solely at financial compliance issues to internal consultants looking compliance issues to internal consultants looking at all operational issues on a risk rather than a time at all operational issues on a risk rather than a time cycle basis cycle basis

Internal Audit is a major Corporate Governance Internal Audit is a major Corporate Governance mechanism mechanism

What is the Role of the Audit & What is the Role of the Audit & Risk Management Committee ?Risk Management Committee ?

Prescribed in the Committee’s Terms of Prescribed in the Committee’s Terms of Reference Reference

Differences between Internal & Differences between Internal & External AuditExternal Audit

External Audit’s primary focus is on the External Audit’s primary focus is on the truth and fairness of the annual financial truth and fairness of the annual financial statements – this is primarily a financial statements – this is primarily a financial compliance focuscompliance focus

Internal Audit focuses on financial issues Internal Audit focuses on financial issues but also on operational issues such as but also on operational issues such as economy, efficiency & effectiveness and on economy, efficiency & effectiveness and on legal compliance and IT issues ?legal compliance and IT issues ?

Accountability requirements for Internal Accountability requirements for Internal Audit – WHO AUDITS THE Audit – WHO AUDITS THE

AUDITORS ????AUDITORS ????

annual review of work by the external annual review of work by the external auditorauditor

Peer Review every 4-5 yearsPeer Review every 4-5 years ongoing review by the Deputy Vice ongoing review by the Deputy Vice

Chancellor Chancellor quarterly & annual review by the Audit & quarterly & annual review by the Audit &

Risk Management Committee Risk Management Committee client surveys are done on the completion client surveys are done on the completion

of each auditof each audit

The significance of the Annual The significance of the Annual Audit PlanAudit Plan

represents a defensible coverage of major represents a defensible coverage of major risk areasrisk areas

allows the Committee to monitor the allows the Committee to monitor the performance of Internal Audit performance of Internal Audit

has a nexus with the high risk areas has a nexus with the high risk areas contained in the Corporate Plancontained in the Corporate Plan

What are the different types of What are the different types of AuditAudit ? ?

Financial complianceFinancial compliance Operational – efficiency, economy & Operational – efficiency, economy &

effectivenesseffectiveness Legal ComplianceLegal Compliance ITIT Comprehensive Comprehensive

Conclusion & QuestionsConclusion & Questions

what is Internal Audit ?what is Internal Audit ? what is the role of the Audit & Risk what is the role of the Audit & Risk

Management Committee ?Management Committee ? the difference between Internal & External the difference between Internal & External

Audit ?Audit ? accountability requirements for Internal accountability requirements for Internal

AuditAudit the significance of the Annual Audit Planthe significance of the Annual Audit Plan what are the different types of audit ? what are the different types of audit ? conclusion & questionsconclusion & questions

Andrew Burchfield’s Contact Andrew Burchfield’s Contact Details Details

Telephone – 9360 6167Telephone – 9360 6167

Email – Email – a.a.burchfieldburchfield@@murdochmurdoch..eduedu.au.au

Fax - 9360 7286 Fax - 9360 7286

Murdoch Home Page re Internal Audit & Risk – Murdoch Home Page re Internal Audit & Risk – http://www.murdoch.edu.au/vco/audit/audit.html http://www.murdoch.edu.au/vco/audit/audit.html