HomeMy WebLinkAbout06.a. Receive annual update on Strategic Risk Inventory/Enterprise Risk Management Program Page 1 of 8
Item 6.a.
CENTRAL SAN
September 28, 2021
TO: FINANCE COMMITTEE
FROM: SHARI DEUTSCH, RISK MANAGEMENT ADMINISTRATOR
PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
REVIEWED BY: ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE ANNUAL UPDATE ON STRATEGIC RISK INVENTORY/
ENTERPRISE RISK MANAGEMENT (ERM) PROGRAM
In January 2020, staff presented to the Board the District's initial Strategic Risk Inventory. At that time it
was noted that the risk inventory would be used as the foundation for an Enterprise Risk Management
(ERM) Program. Since then, semi-annual updates have been provided on the status of these risks.
Background on Enterprise Risk Management
Organizations have traditionally managed risks in a distributed way, with a variety of internal functions that
identify and manage risks. Prior to ERM, these efforts were typically not centrally coordinated or reported
on. A central goal of ERM is to improve this capability and coordination, while providing summary level
reporting to provide a unified picture of risk for stakeholders, and improving an organization's ability to
manage these risks effectively. The Central San Strategic Risk Inventory is used for two purposes:
1. As an input to the Internal Auditor's annual work plan.
2. For monitoring, control, and reporting on risks. The ERM Team meets twice per year to
discuss progress on mitigating the risks identified in the Strategic Risk Inventory. Updates to the
Strategic Risk Inventory are reported to the Administration Committee and Board semiannually.
The attached presentation constitutes the semi-annual update on the ERM Strategic Risk Inventory, and
highlights changes in risk rankings as well as new risks identified (if any). The presentation for this period
is relatively short, as there have been few changes in the assigned scores for the risks between the last
update and now.
This matter was last reviewed with the Finance Committee on January 26, 2021.
ATTACHMENTS:
1. Presentation
September 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 158 of 170
g # Mir
Mid -Year Enterprise Risk
r
Management Update
Finance Committee Meeting
September 28, 2021
• n.
Shari Deutsch, Risk Management Administrator
Phil Leiber, Director of Finance and Administration
September 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 159 of 170
BACKGROUND
• Central San created a risk inventory in 2018-2019
• Presented results of the risk inventory in December 2019
• Committee desired periodic updates; two times per year is the
current plan
• Interim update in Summer
• Full update in Winter
• 25+ strategic risks identified; top 10 were focus for presentation
to the Board
• Risk mitigation plans developed for each
• Interim update:
• Rescore the risks and consider trends
• Updated the mitigation plans
CENTRALSAN
September 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 160 of 170
STRATEGIC RISK REVIEW
RISK SCORES ARE THE SUM OF THE
SCORES ON 4 CRITERIA
Risk Description Probability Severity Mitigation To Do Speed of Onset Risk
1 1 1 1 Score
Pandemic 6 10 3 5 24
Recession 7 8 2 8 25
Internal Control 4 3 2 7 16
Failure
CENTRALSAN
September 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 161 of 170
ERM TEAM MEMBERS
• General Manager
• Director of Operations
• Director of Engineering and Technical
Services
• Director of Finance and Administration
• Human Resources Manager
• Risk Management Administrator
• Internal Auditor
CENTRALSANSeptember 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 162 of 170
STRATEGIC RISKS - SEPTEMBER 2021
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September 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 163 of 170
TOP TEN STRATEGIC RISKS :
CHANGES SINCE LAST REVIEW
Rank Fall 2020 * Spring 2021
1 Natural Disaster 32 Natural Disaster 32
.................................................................................................................................................................................................................................................................................................
2 Major Spill 32 Major Spill 32
.........................................................................................................................................................................................................................................................................................I..1..1.
3 Environmental Risk 31 Environmental Risk 31
.........................................................................................................................................................................................................................................................................................I.......
4 Loss of Major Asset 31 Loss of Major Asset 31
.................................................................................................................................................................................................................................................................................................
5 Continuity Threat/ Pandemic 28 Continuity Threat/ Pandemic 27
.................................................................................................................................................................................................................................................................................................
6 Service or Product Failure 26 Service or Product Failure 26
.................................................................................................................................................................................................................................................................................................
7 Loss of Utilities/Supply Chain 26 Loss of Utilities/Supply Chain 26
.................................................................................................................................................................................................................................................................................................
8 Cyber Security 25 Self-Insurance/Reserve Insufficiency 25
.................................................................................................................................................................................................................................................................................................
9 Self-Insurance/Reserve Insufficiency 24 Cyber Security 25
10 Economic Downturn/Recession 24 Economic Downturn/Recession 24
There were no material changes in the 18 other risks ranked below these during this review period.
CENTRALSAN
September 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 164 of 170
Quest 'ions ?.
4"m
CENTRALSAN
September 28, 2021 Regular FINANCE Committee Meeting Agenda Packet- Page 165 of 170