RISK APPETITE IN PUBLIC SECTOR ORGANIZATION

Transcription

1 RISK APPETITE IN PUBLIC SECTOR ORGANIZATION IRM SOUTH AFRICA REGIONAL GROUP MEETING DE BEERS;CROWN MINES 11 FEBRUARY 2014 THE EXPERIENCE OF EMBEDDING A CULTURE OF MANAGING RISK IN THE GAUTENG DEPARTMENT OF HUMAN SETTLEMENT

2 CONTENT Background Risk Appetite - implementation Way forward Conclusion

3 BACKGROUND RISK AND CHANGE

4 Four Urban Renewal Project Evarton Alexandra Bekkersdal Winterveld BACKGROUND SIZE OF THE ORGANISATION Entire Department Staff Complement Budget Allocation Human Settlement Development Grant + Equitable Share = 4.4 Billion Enterprise Risk Management Unit (staff complements)- 12 Five Regions Tshwane Johannesburg Ekurhuleni Mogale & Meyerton Westonaria

5 BACKGROUND - TONE AT THE TOP OFFICE OF THE MEC MEC'S OFFICE HEAD OF DEPARTMENT RISK MANAGEMENT ENTERPRISE RISK MANAGEMENT INFORMATION SECURITY CORPORATE GOVERNANCE ANTI-FRAUD AND CORRUPTION HUMAN SETTLEMENT DEVELOPMENT CORPORATE SUPPORT FINANCE GOVERNANCE, POLICY, AND MONITORING AND EVALUATION LOCAL GOVERNMENT INSTITUTIONAL SUPPORT

6 BACKGOUND RISK UNIVERSE 2009/ / / /13 Housing Merged Merged Merged 20 risk exposures 21 Risk Exposures 14 Risk Exposures 8 risk exposures Budgetary constraints to eradicate housing backlog. Rapid urbanization, population growth and in migration into Gauteng. Inability to meet targets for Human Settlement Projects Inability to meet expected targets for Human Settlement Projects Delays in processing of payments. Lack of suitable and well located land for housing development. Service delivery protest. Lack of Integrated Information Technology System Lack of suitable and well located land for human settlement development. Housing backlog and rapid increase in housing demand Lack of Integrated Information Technology System 2 Limited well-located land for Human Settlement Development Inability to manage growth of informal settlements as a result of emigration and immigration into the province. Lack of integrated and coordinated plan between National, Province, Municipalities, Agencies/stakeholders i.e. Eskom, Department of Public Transport, Road and Works etc. Insufficient Budget to provide and develop integrated infrastructure. Poor management of land. Difficulty in acquiring suitable and well-located land Lack of integrated cohesive planning amongst the spheres of Government to deal with Human Settlement Service delivery protests Fraud and corruption

7 RISK APPETITE - DERTEMINANTS Personalities/People Culture & Behavior Leadership Power Decision making Business Model and Strategy Mandate, Vision, Mission, Structure Compliance with Rules and Regulations External environment Community needs Stakeholders needs Services Rendered Ethos, Values and Batho Pele Political will

8 RISK APPETITE - LEGISLATIVE MANDATE Corporate Governance King Report III Chapter 4 The role of HOD, CRO, Line managers and other officials PFMA Section 38 Responsibility of the HOD Section 45 Responsibility of other officials Treasury Regulations Sec. 3.2 Annual Risk Assessment(emerging risks) Risk Management Strategy which include Fraud Prevention Plan Public Sector Risk Management Framework GPG Framework - COSO Guideline for Risk Management Processes Adapt to our own environment GPG Standards & Policy Ensures implementation of ERM and uniformity in the province Adopt as is

9 RISK APPETITE OVERSIGHT Oversight bodies Executive Authority EXCO/Board Head of Dept.(HOD)/CEO Forum Audit Committee(AC) GPG Risk Management Forum General Audit Services(GAS)- Internal Audit Auditor General(AG) External Audit SCOPA Public Service Commission National Treasury National Human Settlement Role Governance of ERM in Province Quarterly reviews Top risks Quarterly reviews Top risks CRO meet quarterly Status on ERM Implementation Conduct Risk based audit & test ERM Implementation annually Annual reviews Review AG Report on Risk Matters Annual review ERM Implementation Test maturity levels (SSP) Annual review DORA - Grant

10 RISK APPETITE LEADERSHIP AND OWNERSHIP HOD Understood the need to embed risk management culture PFMA Sec 38 Mandate for RM processes He gave unqualified support and priority Setting the Tone at the Top MANAGEMENT(DDGs, CD &Directors) Difficult group to convince Own perception on risk appetite We had to fight for their time and attention with other departmental priorities Rank was critical to them CRO Embed risk management to entire organization Coordination and Facilitation Get buy in from all stakeholders Empower the leadership and the rest in risk management

11 RISK APPETITE- STRUCTURES Risk Man. Committee Sits quarterly, Chaired by HOD Includes DDGs & CDs Risk Management Sub- Committee Sits bi-monthly, chaired by CRO, Appointed Risk Champions Chief Risk Officer Facilitates & coordinates the above

12 RISK APPETITE - INGREDIENTS Relationship TARGETS MANDATE STRATEGY OBJECTIVES GRANT ALLOCATION BUDGET/ VOTE HUMAN SETTLEMENT & HOW WELL WE SPEND

13 RISK TORALENCE Risk Tolerance Risk Appetite Aligning expenditure to set targets Organisational Performance

14 RISK APPETTITE SYNERGY PROCESSES 5.MONTHLY,QUARTERLY AND ANNUAL REPORT Risk Reporting Risk Management Statement annual report Top Management Commitment towards risk 4. PERFOMANCE AGREEMENT Performance Review on management of risks within area of responsibility Annual Report Business Processes Performance Agreement Annual Performance Plan Budget Processes 5. BUSINESS PROCESSES Risk incorporated into: Business Decision Business Meetings Business Function 3. ANNUAL PERFOMANCE PLAN Risk identified for each programme and sub-programme; setting targets 2. BUDGET PROCESSES Risk Appetite identified in relation to strategic Goals & Objective 1. STRATEGIC PLANNING Risk and mitigation measure identified for each Strategic Goals & Objective Strategic Planning

15 RISK APPETITE - MEASURING PERFORMANCE Financial Non financial Expenditure Meeting the targets

16 RISK APPETITE IMPACT Difficult to quantify risk appetite as service based organisation Difficulty in funding risk appetite Reliance on how well we perform as an organisation as per external audit outcome Difficulty in aligning financial performance to none financial performance Risk and change in our environment affects continuity Involvement of all stakeholders in housing value chain is a challenge

17 WAY FORWARD - BUILDING ORGANASIONAL RESILIENCE Governance Leadership Ethics Conduct Performance & Reporting Organisation Risk Management Internal controls

18 CONCLUSION KEEPING THE MOMENTUM IS KEY FOR SUCCESSFUL RISK APPETITE

19 CONCLUSION THANK YOU