CFC’s Financial Webinar Series“Risk Management: A Panel Discussion”
Financial Webinar Series
How to Submit Your Question
Step 2: Click on the Send button.
Step 1: Type in your question here.
To Download the Program Files…
1. Click here in the Links box to open the presentation slides or handout.
2. Click on an icon to print or save the file.
3
Polling Question
Do You Like Ice Cream?
CFC’s Financial Webinar Series“Risk Management: A Panel Discussion”
Financial Webinar Series
Credit Risk
Prepayment Risk
Country Risk
₡urrency Risk
Opportunity Risk
Financial Webinar Series
Financial Webinar Series
What year was Risk introduced by
Parker Brothers, the maker of so many other famous games?
Polling Question
Financial Webinar Series
Financial Webinar Series
Today’s takeaway:
There is risk in almost everything
we do!
It’s all about balancing risk…
versus reward.
Financial Webinar Series
Roberta Aronson
Deputy General Counsel for CFC
Gary Bradbury
VP, Internal Audit for CFC
Guy Ford
Information and Security Compliance
for New Hampshire EC
Financial Webinar Series
Roberta Aronson
Deputy General Counsel for
CFC
Financial Webinar Series
• Why Focus on Enterprise Risk Management?
• What is ERM?
• Risk Assessment
• Risk Monitoring and Reporting
• Organizing the Effort
Financial Webinar Series
Federal
Community
Investors
MarketGovernance
Financial Webinar Series
Financial Webinar Series
How Is ERM Different From Traditional Risk
Management?
• Traditional risk management typically focuses
primarily on insurable hazards such as property
and catastrophe risks
• Legal and accounting departments focus on
establishing proper controls to prevent specific
undesirable, costly events
Financial Webinar Series
ERM Purpose:
• Reduce unacceptable performance risk
• Align and integrate varying views of risk management
• Enhance governance by strengthening board oversight and managements roles and responsibilities
• Successfully respond to changing business environment
• Build member, investor, stakeholder confidence
Financial Webinar Series
Key Points
• Risk Governance—Setting corporate strategy
• Risk Management Philosophy—Setting a tone
at the top
• Risk Tolerance and Appetite—Matching your
business objectives
Financial Webinar Series
Consider…
• A Risk Culture Survey
• Risk Infrastructure and Management—The people, processes, and technology
• Risk Ownership
• Risk Assessment
– Strategic Risk Assessment
– Operational Risk Assessment
Financial Webinar Series
Gary Bradbury
VP, Internal Audit for CFC
Financial Webinar Series
Risk Assessment - Value Proposition
• Identifying, assessing, and managing risk shows an organization’s ability to adapt to change.
• Risk assessment helps organizations:
• Recognize potential adverse events
• Be more proactive and forward-looking
• Establish appropriate risk responses, and
• Identify emerging risks
• The real value: preventing or minimizing negative
surprises and unearthing new opportunities.
Financial Webinar Series
• Strategic Risk Assessment.
─ Evaluation of risks relating to the organization’s mission and strategic objectives, typically performed by board and/or senior management in
strategic planning meetings.
• Operational Risk Assessment.
─ Evaluation of the risk of loss resulting from
inadequate or failed internal processes, people and systems.
Risk assessments are conducted at
various levels of an organization.
Financial Webinar Series
Risk Assessment Process:
• Identify “Events” that could affect the
achievement of objectives.
―Risk – the possibility that an event will occur and have a negative impact on the achievement of objectives
―Opportunity – an event with a positive impact on the
achievement of objectives
• Important to Agree on Common Definitions
Financial Webinar Series
Risk Assessment Process
Medium Risk High Risk
Low Risk Medium Risk
LIKELIHOOD
IMPACT
High
Low High
Financial Webinar Series
Risk Management
Response Strategy
• Avoidance
• Reduction
• Alternative Actions
• Share or Insure
• Accept
Financial Webinar Series
How to Get There From Here…
• Evaluating Controls—Gap
Analysis
– Preventive controls
– Detective controls
• Information and Communication
• Monitor and Review
Financial Webinar Series
• Too many poorly defined risks
• A culture fixated on process not
management
• Allocating responsibility to a “risk
manager” with limited business authority
• Inability to engage effectively with the
board
Some Common Pitfalls Include…
Financial Webinar Series
One size does not fit all!
Financial Webinar Series
Financial Webinar Series
Guy Ford
Information Systems Security
Compliance Executive
for
New Hampshire Electric Cooperative
Financial Webinar Series
Financial Webinar Series
Creating the WorkbookEnterprise Budgeting Process
•Business Unit Budgets
•Budget Workbooks
•Budget Buddies
•Management Review
•Board Approval
•Implementation
•Management
•Operational
Enterprise Risk Management
•Business Unit Risk Assessments
•Risk Workbooks
•Risk Assessment Buddies
•Management Review
•Board Approval
•Implementation
•Management
•Operational
Financial Webinar Series
CONTEXT
• Political & Regulatory
• Energy (Power Supply)
• Reliable Electric Service
• Financial & Economical
• Operational
• Rates / Fees
• Member Satisfaction
• Safety & Security
Key
Drivers
of
Success
(KDS)
Financial Webinar Series
INVENTORY
Risk Exposure– Identify vulnerabilities.
– Identify threats.
Risk Analysis– Assess likelihood
– Assess impact
Ranking
Risk Strategy– Avoid
– Reduce
– Share
– Accept
Financial Webinar Series
Context
Risk Assessment
Key
Drivers of
Success
Risk Exposure Risk Analysis
RankingRisk
StrategyVulnerabilities Threats Probability Impact
Political
Energy Supply
Reliability
Financial
Operational
Rates
Member
Satisfaction
Safety & Security
Financial Webinar Series
Financial Webinar Series
First evaluate the Risk Exposure of each Key Driver of Success
Financial Webinar Series
Then conduct a Risk Analysis of each Key
Driver of Success that has a High Risk Exposure
If there are none that have a High Risk
Exposure (or after
those have been addressed),
conduct a Risk
Analysis on those with a Medium Risk
Exposure
Financial Webinar Series
Context
Risk Assessment
Key
Drivers of
Success
Risk Exposure Risk Analysis
RankingRisk
StrategyVulnerabilities Threats Probability Impact
Political
Energy Supply
Reliability
Financial
Operational
Rates
Member
Satisfaction
Safety &
Security
Financial Webinar Series
Operational
Context
Operational Risk Assessment
Key
Drivers of
Success
Risk Exposure Risk Analysis
RankingRisk
StrategyVulnerabilities Threats Probability Impact
Workforce
Management
Succession Plan
Bench Strengths
Capabilities
Mobile
Workforce
Technology
Communication
Systems
Information
Systems
Control Systems
Cyber Security
Business
Continuity
Environment
Financial Webinar Series
Workforce
Management
Key
Drivers of
Success
Work force Management Risk AssessmentRisk Exposure Risk Analysis
RankRisk
StrategyVulnerabilities Threats Prob. Impact
Succession Plan
Bench
Strengths
Mobile
Workforce
Financial Webinar Series
The Process
Financial Webinar Series
Now…let’s turn it over to our audience!
Financial Webinar Series
How to Submit Your Question
Step 2: Click on the Send button.
Step 1: Type in your question here.
Financial Webinar Series
Federated Rural Electric Insurance
Exchange
www.federatedrural.coop
Financial Webinar Series
Please take a minute to complete
the NRECA survey.
Your responses will help us improve the broadcast quality of these Web
conferences!
Financial Webinar Series
WWW.NRUCFC.COOP
Events &
Training Tab
Look for all of
our program
recordings
right here!
Financial Webinar Series
Mark Your Calendar For Our Next Event:
October 12October 12,
1 p.m. Eastern Daylight Time1 p.m. Eastern Daylight Time
The CFC/U.S. Bank One Card: The CFC/U.S. Bank One Card:
A new way to manage fundsA new way to manage funds
Financial Webinar Series
Upcoming Programs
NovemberNovember ——Declining GrowthDeclining Growth
DecemberDecember ——FrackingFracking
Financial Webinar Series
MOBILEMEETINGSMOBILEMEETINGS
Financial Webinar Series
This program—Risk Management: A Panel
Discussion—is a copyrighted presentation of CFC. No portion of this program may be
reproduced, used or distributed without CFC’s written consent.
To Save Today’s Presentation: 1.
2.
Click in Links Box to open
handouts.
Click here to print or save handouts.