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Presented by John Fitzsimon and Peter Getugi, Nairobi, 5 February 2009
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Risk Management: Principles, Methodologies and Techniques
John FitzsimonDirector, CGIAR Internal Audit Unit
Peter GetugiILRI Internal Audit Manager
NAIROBI FEBRUARY 5, 2009
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Session Outline
Day I. - 5 Feb 2009 (8.30 am to 1pm)· Recap on principles of risk management. · Risk management methodologies and techniques Day II. – 6 Feb 2009 (8.30 am to 1pm)· Institute risks identification, update and assessment. · Group feed back sessions. · ILRI Risk management -Going Forward
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Risk Management:Not such a new subject.....
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RESEARCH STRATEGY AND PROJECT PORTFOLIO
PEOPLE
PHYSICAL INFRASTRUCTURE
TECHNOLOGY
INTELLECTUAL AND GERMPLASM ASSETS
FINANCE
INTERNALPROCESSES
EXTERNALENVIRONMENT
A Center’s achievement of its visionand mission is influenced by:
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These factors present the Center with both opportunities and risks:
OPERATIONAL EFFECTIVENESS
FINANCIAL INTEGRITY AND COMPLIANCE
LEGAL COMPLIANCE EFFICIENCY
SAFETY AND SECURITY
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Definitions
Organizations pursue opportunities to achieve their objectives.
Risks are those occurrences that will have an adverse impact on the organization’s achievements, resulting from inadequate or failed systems or processes, mistakes or external events
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Definitions
RISK MANAGEMENT: A process applied across the enterprise designed to identify potential events that may affect the entity:
positive as well as negative manage risks (and opportunities) to be within its risk appetite provide reasonable assurance regarding the achievement of the
entity’s objectives
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Why the attention on more formalized risk management?
Makes good business sense Fulfills stakeholder expectations for high standards of
governance Meets donor requirements for assurance Helps avoid surprises!
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Risk Management Framework:Key Principles
Establish the context Consider risks across all activities Consider both internal and external
factors Create an internal environment that
supports proactive risk management at all levels
Establish clear business objectives so that risks can be more readily identified and assessed
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Risk Management Framework:Key Principles
Identification of Risks Inventory risks as part of business processes Identify shared risks
Risk analysis and evaluation Consider impact of failure and likelihood of occurrence and damage Evaluate organization-wide significance of risks identified at
unit/activity/project level Evaluate collaboratively shared risks
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A Risk Management Framework:Key Principles
Risk Treatment Oversight process to ensure that there
are clear management responses for all significant risks identified
Ensure all risk responses are implemented through relevant control activities
Integrate risk management results into policy and planning processes
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ILRI Risk Management Framework:
Monitoring and review Document results of monitoring efforts
including action taken in response to risk analyses
Implement an internal reporting process to capture unit/activity level risk analyses
Implement a reporting process for senior management and Boards
Center-wide risk management system
Management analysis and reporting
Board reporting
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Risk Management Framework:Concepts
Opportunities v. Hazards
Impact Likelihood Preventive controls Mitigating actions Risk appetite Risk response
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What is your risk appetite?
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Case Study: Enterprise Risks
WHAT COULD BRING THE BUSINESS TO A GRINDING HALT: IN DAYS?
IN WEEKS? IN MONTHS? IN 5 YEARS?
CAN WE PREVENT IT?HOW PREPARED ARE WE TO RECOVER?
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Top Risks for ILRI – Identified in current risk register
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Other risks to consider?
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Case Study: Project and Joint Venture Risks
CENTER
PARTNERS DONORS
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Typical Project/Venture Risks
Design Phase Structure/design is not aligned to the objectives Insufficient input from stakeholders Unrealistic budgets and timelines Implementation Phase Insufficient skills on project/venture team Overly complex to manage Lack of clarity about sharing liabilities and credits Monitoring and Evaluation Phase Lack of clear indicators and benchmarking to assist M&E
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Where to from here?
REPORTING TO THE BOARD
PUBLIC REPORTING
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Thank you!