HomeMy WebLinkAbout11.b. Receive Semi-Annual update on Strategic Risk Inventory/Enterprise Risk Management (ERM) Program Page 1 of 5
Item 11.b.
CENTRALSAN
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CENTRAL CONTRA COSTA SANITARY DISTRICT
November 3, 2022
TO: HONORABLE BOARD OF DIRECTORS
FROM: SHARI DEUTSCH, RISK MANAGEMENT ADMINISTRATOR
PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
REVIEWED BY: ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE SEMI-ANNUAL UPDATE ON STRATEGIC RISK INVENTORY/
ENTERPRISE RISK MANAGEMENT (ERM) PROGRAM
In January 2020, staff presented to the Board Central San'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 March 22, 2022, covering the risk inventory
status for the second half of calendar year 2021.
ATTACHMENTS:
1. Presentation
November 3, 2022 Regular Board Meeting Agenda Packet- Page 113 of 245
Page 2 of 5
November 3,2022 ,
Strategic Risk Inventory
and Enterprise Risk
Management -
Summer 2022 Update
Board of Directors Meeting _e .
Shari Deutsch
Risk Management Administrator - -
Philip Leiber
Director of Finance&Administration
1
1
ERM Program - '
i
Strategic Risk Inventory
Created in 2018-2019
Presented to Admin Committee in December 2019 and
to Board in January 2020
Reviewed b ERM Team biannually
Y
Updates included in biannual reports to Admin g
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
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November 3, 2022 Regular Board Meeting Agenda Packet- Page 114 of 245 1
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E R M 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
;w
Risk Scoring
Four-part risk assessment, each scored from 1-10
Risk Score is the total of four scores =a
Ranking based on Risk Score: Highest score = Highest Rank
Risk Description
N..
Economic 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 10 (or 11 ):
Rank and Scores Evolve over Time
Rank Summer 2022 Score Winter 2022 Score
1 Environmental Risk 34 Natural Disaster 32
2 Major Spill 32 Major Spill 32
............... ................ .... .................. .................. .................................
3 Natural Disaster 32 Environmental Risk 31
............... ................ .... ............ .................. .................................
4 Loss of Major Asset 30 Loss of Major Asset 30 4
5 Physical Security Breach,. ... . ...� 28, Loss of Utilities/Supply Chain ... . .. 27
6 Loss of Utilities/Supply Chain 27 Continuity Threat/Pandemic 27
............... .... .................. .................................
7 Continuity Threat/Pandemic 27 Service or Product Failure 26
8 Service or Product Failure 26 CyberSecurity 25
......... ................ .... _......... ................... ...............
....................
9 CyberSecurity 25 Self-Insurance/Reserve Insufficiency 24
10 Self-Insurance/Reserve Insufficiency 24 Loss of Life/Major Injury i 23
11 Economic Downturn/Recession 24 Economic Downturn/Recession 23
The top risks don't change very often,but occasionally
a new top 10 risk arises and others are displaced
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November 3, 2022 Regular Board Meeting Agenda Packet- Page 115 of 245 2
Page 4 of 5
Current Strategic Risks (28)
Operations Service or Product Failure F'"e"Ceg poor[nstomer Commanieati°n:
Admin
Slow Response to Customer Self-insurance/Reservelnsufficienry ` I ��
Poor Jurisdictional Coordination Failure of lutemal Controls
I
Loss of Utilities/Supply Chain Economic Downturn/Recession (I
Continuity Threat/Pandemic Need for Large Rate Increase 7
Loss of Major Asset Loss of Major Customer/Partner
Physical Security Breach Higher Borrowing Costs/Loss of TE Bond Status
Social/Political Risk(Civil Unrest etc( y
CyberSecurity
Lg Tech Implemeniati°n Failure
r LAornal Data ConnectivityRisk f
Engineering Environmental Risk
Failure to Adopt New Technology J
New/Proposed Regs/Legislation &j
Natural Disaster }
Major Spill
HR Loss of Life/Major Injury
Poor Coordination on Large Projects
Work Stoppage
Changing Workforce
Change Readiness Risk
5
5
Strategic Risks - Summer 2022
Alk
G.
40
Strategic Risk Scores-Summer 2022
`
35 —
30
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November 3, 2022 Regular Board Meeting Agenda Packet- Page 116 of 245 3
Page 5 of 5
Questions?
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November 3, 2022 Regular Board Meeting Agenda Packet- Page 117 of 245 4