HomeMy WebLinkAbout04.d. Receive annual update of Strategic Risk Inventory/Enterprise Risk Management (ERM) Program Page 1 of 5
Item 4.d.
CENTRAL SAN
March 22, 2022
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 semi-annually.
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 September 28, 2021, covering the risk
inventory status for the first half of calendar year 2021.
ATTACHMENTS:
1. Presentation
March 22, 2022 Regular FINANCE Committee Meeting Agenda Packet- Page 127 of 141
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ems;.
Strategic Risk Inventory and
Enterprise Risk Management
Winter 2022 Update
Finance Committee Meeting
March 22, 2022
Shari Deutsch, Risk Management Administrator
Phil Leiber, Director of Finance and Administration
w-s II
1
ERM PROGRAM
Strategic Risk Inventory
• Created in 2018-2019
• Presented to Admin Committee in December 2019 and to Board
in January 2020
• Reviewed by ERM Team biannually
• Updates included in biannual reports to Admin Committee
and Board
Mitigation Plans
• Each risk on the inventory has a mitigation plan.
• Each plan is reviewed, updated during biannual ERM Team Mtg.
• Progress and goals amended in response to risk scores and
operational environment
CENTPAL SAN
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March 22, 2022 Regular FINANCE Committee Meeting Agenda Packet- Page 128 of 141 1
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ERM PROGRAM
ERM Team
• Meets biannually to review and update strategic risk inventory
and mitigation plans, then re-scores all strategic risks
• Members are the Executive Team, Risk Manager and
Internal Auditor
Risk Scoring
• Four-part risk assessment, each scored from 1-10
• Risk Score is the total of four scores
• Ranking based on Risk Score: Highest score = Highest Rank
Risk Description Speed of Onset Total=Risk
1-10 ScoreEconomic Uncertainty/Recession 7 8 2 8 25 1
Global Pandemic 6 10 3 5 24 2
Internal Controls Failure 4 3 2 7 16 3
3
THE TOP TEN:
RANK AND SCORES EVOLVE OVER TIME
Rank Winter 2022 Score Summer 2021 Score
1 Natural Disaster 32 Natural Disaster 32
2 Major Spill 32 Major Spill 32
3 Environmental Risk 31 Environmental Risk 31
4 Loss of Major Asset 30 Loss of Major Asset 31
5 Loss of Utilities/Supply Chain 27 Continuity Threat/Pandemic 27
6 Continuity Threat/Pandemic 27 Service or Product Failure 26
7 CyberSecurity 25 Lossof Utilities/Supply Chain 26
... .............. ...................... ............... ................ .............. .. .............. .._............ ........... ........... ...............
8 Self-Insurance/Reserve Insufficiency 24 Self-Insurance/Reserve Insufficiency 25
9 Loss of Life/Major Injury 23 CyberSecurity 25
10 Economic Downturn/Recession 23 Economic Downturn/Recession 24
The top risks don't change very often.
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March 22, 2022 Regular FINANCE Committee Meeting Agenda Packet- Page 129 of 141 2
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CURRENT STRATEGIC RISKS (28)
Op.Mtiun.Service or Product Failure Adnan
Poor CPFt9mN(.pmmunitdUons
SJD ftemnse to Customer Selt-Insura—/Rene inwrliciency
Pour Jurlydktknal Coordination Failure of Internal Controls
Loss o£lltilitieslSupply Chain Economie DowntumlReeesgien
Conunuity Threat I Pandervix Need for Large Aw Iwc'e o
tossof Major Asset Lora of Major Cv.iwrlrrlPtlrinrr
Physical SecurRy Rreech
... .._ Nigher borrowing CosrslLoss of TE Bond Status
Social I Political Risk(Civil VnreH utcl
eyber5peur4y
Lg Tech IMPl—imation Failure
Engi—drig Environmental Risk Err—id pate ConnecrNay Rick
New/Pro"sed Regs/Legislation Failure to Adopt New Technology
Natural Disaster
Major Spill
Poor Coordination on Large Projects
KR Loss of LI{e/Major Injury
Work Stoppage
Changing Workforce
Change Readiness Risk
3§
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STRATEGIC RISKS - WINTER 2022
35
30
25
20
15 — —
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To Do Onset
6
March 22, 2022 Regular FINANCE Committee Meeting Agenda Packet- Page 130 of 141 3
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Questions?
March 22, 2022 Regular FINANCE Committee Meeting Agenda Packet- Page 131 of 141 4