cfc’s financial webinar serieseoplugin.commpartners.com/nreca/120912/risk...•management...

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”


Credit Risk

Prepayment Risk

Country Risk

₡urrency Risk

Opportunity Risk



What year was Risk introduced by

Parker Brothers, the maker of so many other famous games?

Polling Question



Today’s takeaway:

There is risk in almost everything

we do!

It’s all about balancing risk…

versus reward.


Roberta Aronson

Deputy General Counsel for CFC

Gary Bradbury

VP, Internal Audit for CFC

Guy Ford

Information and Security Compliance

for New Hampshire EC


Roberta Aronson

Deputy General Counsel for

CFC


• Why Focus on Enterprise Risk Management?

• What is ERM?

• Risk Assessment

• Risk Monitoring and Reporting

• Organizing the Effort


Federal

Community

Investors

MarketGovernance



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


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


Key Points

• Risk Governance—Setting corporate strategy

• Risk Management Philosophy—Setting a tone

at the top

• Risk Tolerance and Appetite—Matching your

business objectives


Consider…

• A Risk Culture Survey

• Risk Infrastructure and Management—The people, processes, and technology

• Risk Ownership

• Risk Assessment

– Strategic Risk Assessment

– Operational Risk Assessment


Gary Bradbury

VP, Internal Audit for CFC


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.


• 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.


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


Risk Assessment Process

Medium Risk High Risk

Low Risk Medium Risk

LIKELIHOOD

IMPACT

High

Low High


Risk Management

Response Strategy

• Avoidance

• Reduction

• Alternative Actions

• Share or Insure

• Accept


How to Get There From Here…

• Evaluating Controls—Gap

Analysis

– Preventive controls

– Detective controls

• Information and Communication

• Monitor and Review


• 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…


One size does not fit all!



Guy Ford

Information Systems Security

Compliance Executive

for

New Hampshire Electric Cooperative



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


CONTEXT

• Political & Regulatory

• Energy (Power Supply)

• Reliable Electric Service

• Financial & Economical

• Operational

• Rates / Fees

• Member Satisfaction

• Safety & Security

Key

Drivers

of

Success

(KDS)


INVENTORY

Risk Exposure– Identify vulnerabilities.

– Identify threats.

Risk Analysis– Assess likelihood

– Assess impact

Ranking

Risk Strategy– Avoid

– Reduce

– Share

– Accept


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



First evaluate the Risk Exposure of each Key Driver of Success


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


Context

Risk Assessment

Key

Drivers of

Success


RankingRisk


Political

Energy Supply

Reliability

Financial

Operational

Rates

Member

Satisfaction

Safety &

Security


Operational

Context

Operational Risk Assessment

Key

Drivers of

Success


RankingRisk


Workforce

Management

Succession Plan

Bench Strengths

Capabilities

Mobile

Workforce

Technology

Communication

Systems

Information

Systems

Control Systems

Cyber Security

Business

Continuity

Environment


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


The Process


Now…let’s turn it over to our audience!


How to Submit Your Question

Step 2: Click on the Send button.

Step 1: Type in your question here.


Federated Rural Electric Insurance

Exchange

www.federatedrural.coop


Please take a minute to complete

the NRECA survey.

Your responses will help us improve the broadcast quality of these Web

conferences!


WWW.NRUCFC.COOP

Events &

Training Tab

Look for all of

our program

recordings

right here!


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


Upcoming Programs

NovemberNovember ——Declining GrowthDeclining Growth

DecemberDecember ——FrackingFracking


MOBILEMEETINGSMOBILEMEETINGS


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.

cfc’s financial webinar serieseoplugin.commpartners.com/nreca/120912/risk...•management...

Documents