PowerPoint Template

Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
1.2.8
Risk Management
Friday, 16.09.2011
Concrete examples on implementation of risk
management process in the Finnish public
administration
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
CASE 1.
Implementation on Risk Management process to
Finnish Tax Administration
 The Tax Administration collects the majority of Finnish taxes
and tax-like charges.
 HQ in Helsinki and over 100 services offices cross the country
(Personnel appr. 5500)
 Proactive guidance, excellent service and credible tax control
ensure the accrual of tax revenues. The goal is to have customers
handle tax-related transactions independently and in the correct
manner.
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Background
The management group had taken a decision to
develop and implement a risk management process to
organisation.
Internal Audit department was assigned to do the
task.
COSO ERM was chosen to be the main frame for risk
management process.
Tekijä, yksikkö
29.11.2011
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Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Backround (2)
 Over all schedule was designed and approved:
 Pilot project during january - april 2008
 Based on the pilot experiences organisation wide roll out was planned to happen
during october 2008 – february 2009
 Next step after roll out was to integrate risk management to annual planning process
 A software Kaiku-Luotain Risk Management System
was chosen to support the process (risk identification,
assessment, action planning and reporting)
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
General motivation behind the implementation
 All the agencies take risks because future is uncertain
 Recognazing of uncertainty and analyzing of impacts related to different
events
 Constant changes in operational environment
- Changes in legislation and taxation
- Development of IT-technology
- Changes in structure of organization
- Productivity demands
 CONCLUSION: Internal control can be assured only if risks are analyzed
(taking account the nature of organization)
 CHALLENGE: There exits uncertainty... Is the administration aware of all the
changes?
 How to response...
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Timeline of Risk Mangement implementation process
 Preparations and pilot 1-2 /2008
 Defining the goals and risk management process
 Definition of scope (pilot areas)
 Preparations of support material and test of the Kaiku-Luotain system
 Selection of internal facilitators (appr. 15 persons of diffrent positions from organisation)
 Training workshop for internal facilitators
 Pilot 2-4 /2008
 Pilot workshops done across the organisation and country
 First risk reports were published
 Summary of pilot experiences and lessons learned  corrections made to the original plan
 Preparations for organisation wide roll out 5-9 /2008
 Selection of additional facilitators (from 15 to 50) and training
 Selection of areas to participate (ensure geographical, organisational and operative coverage)
 Definition of roles and responsibilities, reporting structure, utilization of risk based information
 Roll out 10/2008-2 /2009
 Execution of risk workshops according to the plan
 Critical areas of operations had been identified
 First time an organization wide risk register had been created for management to take action
Tekijä, yksikkö
29.11.2011
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Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Success factors
 Good preparation and planning
 Effective training of facilitators
1 day workshops incl. Risk Management theory and e-tool Kaiku-Luotain
(50 persons)
 Well prepared support material for facilitators
 Detailed instructions for risk workshops and for risks identification and
assessment
 Good support along the process
 Clear goals and expectations
 Strong management commitment
 Effective risk identification and assessment process at the sites (see below)
 Facilitator and 4-8 participants from the organization/workshop
 “3+1” concept (3 threats and 1 opportunity)

Workshop (1/2 day)
Pre task for participants
prior to workshop
(”3+1”)
Tekijä, yksikkö
- Common view of key risks
- Identification and assessment of
risks
29.11.2011
Risk reports and action
planning together with
management
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Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Risk management process
Goals & Expectations
Ensure resources
Follow up of actions
and implications
Define action plans
prioritize
Select areas to assessed
Define process
Identify threats and opportunities
Assess risks
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
CASE 2.
Identification of strategic
risks at Energy Market
Authority (EMV)
Tekijä, yksikkö
29.11.2011
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Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Energy Market Authority
 The Energy Market Authority (EMV) enhances and monitors the
activities of the electricity and natural gas market and enhances the
realisation of climate goals.
 The Energy Market Authority, subordinate to the Ministry of
Employment and the Economy, fulfils its supervision task in cooperation with the ministry, the Finnish Competition Authority and
various other authorities.
 Operations are financed mostly through licence and permit fees
collected from electricity and natural gas grid holders. Emissions
trading operations are funded mostly by the national budget.
 HQ at Helsinki
 Personnel 50 - highly educated specialists
Tekijä, yksikkö
29.11.2011
10
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Background
 EMV management wanted to get a holistic review of potential risks
threatening their goals (strategic perspective).
 Due to high work load among management members the expectation
was that the risk identification and assessment process should be
effective.
 Management team was participating the process (6 persons).
 The participants did not have earlier experience of risk management.
 Risk Management process was to be developed and implemented.
 CFO was assigned to be responsible.
 Process “kick off” 10/2009 and action plans ready by 1/2010
Tekijä, yksikkö
29.11.2011
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Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
EMV Risk Management Process
 Prior to interviews each participant got assignment to identify
potential risks from their area of responsibility.
 Preparations and training workshop was done by the facilitators
 Individual interviews done by facilitators (c. 2 hours/interview).
Purpose of the interview was to collect risk information.
 After interviews 1st version of risk register was created by facilitators.
 After that the identified risks were prioritized and action plan created
through workshop together with the management group.
PREPARATIONS AND
TRAINING
- Management group
- September
Tekijä, yksikkö
RISK
IDENTICATION
TASK
- Participants
- October
29.11.2011
INTERVIEWS
- By participant
- Collection of
identified risks
- October
1ST REVIEW
OF RISK
REGISTER
- Lilja,Martin
- November
PRIORITIZING
RISKS AND ACTION
PLANNING
- Management
Group
- November
12
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
Succes factors
Commitment of management group
 Schedules
 Assignment
Light and effective process from participants
perspective
Good knowledge of business environment and
own organization
Effective utilization of e-tool Kaiku-Luotain
Tekijä, yksikkö
29.11.2011
13
Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
General experiences
 Utilization of e-tools and soft wares supports the risk
identification and assessment process and enables effective
sharing of information (e.g reports)
 Kaiku-Luotain, Assessment frame, Root cause, excel
 Risk Management process should be integrated to other
key process in order to prevent risk management to be a
separated process of other key activities in the
organizations.
 Annual economical and operative planning processes
Tekijä, yksikkö
29.11.2011
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Decision Making and Performance Management in Public Finance
Kamu Maliyesinde Karar Alma ve Performans Yönetimi
TR08IBFI03
General experiences (2)
 Management commitment and support
 Clear goals and expectations
 Communication
 Recommended implementation in organizations
 Top down
 Drivers for developing Risk Management
 Legislation
 Statement of assurance
 Good governance
 Year clock – connection to operational management
 Risk Management policy