1. COMMON CHALLENGES AND SOLUTIONS IN ERM IMPLEMENTATION TO IMPROVE MUNICIPAL CLEAN ADMINISTRATION PROCESS. M.J. RAMAKGOLO (CCSA)

2. Contents 1.What is a Risk 2.What is Risk Management 3.What is ERM 4.ERM in Municipal Context 5.Challenges and solutions 6.Conclusion

3. WHAT IS A RISK “A risk is any threat or event that is currently occurring, or that has a reasonable chance of occurring in the future, which could undermine the institution’s pursuit of its goals and objectives.” “A risk is the chance of something happening or not happening that will have negative impact upon the objectives of the Municipality and/or individual department. ” “The threat that an event or action/inaction will adversely affect the ability of an organization to achieve its business objectives and successfully execute its strategies. ”

4. WHAT IS RISK MANAGEMENT Risk Management is a continuous, proactive and systematic process, effected by a entity’s executive authority, accounting officer, management and other personnel, applied in strategic planning and across the entity, designed to identify potential events that may affect the department, and manage risks to be within its risk tolerance, to provide reasonable assurance regarding the achievement of entity’s objectives.

5. WHAT IS ERM Enterprise Risk Management is a process, effected by the Board, Executive Management and personnel, applied in strategy setting and across the operations of the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.

6. ERM IN MUNICIPAL CONTEXT It is about improving the ability to deliver on the IDP objectives by managing threats, enhancing opportunities and creating an environment that adds value to ongoing operational activities. All risk and risk management activities should be aligned to the municipality’s values and principles, strategic and operational objectives as well as processes and procedures underpinning the business environment of the municipality. The risk management approach should inform and direct work to gain confidence on the reliability of control strategies therefore provide assurance.

7. CHALLENGES 1. DEFINING RISK The issue: One of the biggest challenges is establishing a consistent and commonly applied risk nomenclature. Any inconsistencies between risk definitions or methodologies are likely to jeopardize the program’s success. Potential solution: Establishing a formal risk management framework and common risk nomenclature can be accomplished through working groups comprised of at least one representative from each significant business unit and shared service function. The most critical goal of the group is to establish the definition of risk itself. While each risk category may be distinct, the definition of risk must be consistent and supported by clear guidance. The group must also create a risk inventory and supporting risk taxonomy to further define and rank all the risks faced by the organization.

8. CHALLENGES 2. RISK ASSESSMENT METHOD The issue: Enterprise risk assessments are performed using a variety of approaches and tools, including surveys, interviews and historical analysis. Each approach offers its own value and drawbacks that must be closely reviewed to determine organization suitability. Potential solution: The risk assessment method employed is largely based on the number of respondents surveyed, corporate culture and– perhaps most relevant–organizational familiarity with risk management. Face-to-face assessments are helpful as they facilitate risk management education and guidance, encourage discussion and allow for data collection. In addition, the risk assessment method is generally tailored to the audience. For example, many organizations administer executive risk assessments using a group interview session and apply individual techniques to management or technical personnel.

9. CHALLENGES 3. ERM OWNERSHIP The issue: The question regarding who should “own” ERM is often unclear and commonly disputed at Council, audit committee and management levels. Potential solution: In most programs, risk is primarily owned by line management with oversight from independent risk, compliance and management oversight functions. The broader question regarding ERM program ownership is less decisive and largely based on Council and audit committee accountability, established risk management function and infrastructure, and corporate risk philosophy. While there is no one single industry practice with respect to organization structure, ERM administration should generally be held by risk management followed by internal audit, finance/treasury, legal and various supporting departments (e.g., compliance, strategic planning). 10 common challenges of ERM by Jim Negus

10. CHALLENGES 4. TIMING OF RISK ASSESSMENTS The issue: Alignment of all risk assessment programs within the municipality. Potential solution: Risk assessments may be aligned to the strategic planning program of the municipality.

11. CHALLENGES 5. TECHNOLOGY (use and lack of) The issue: Municipalities generally do not use technology in their risk management,whether for assessments, aggregation, or analytics. Potential solution: it is generally ideal to join in the world of technology especially due to its accuracy and use it. However, practitioners should strive for use of reliable methods in risk management.

12. CONCLUSION It is interesting to review some of the common challenges risk management professionals are currently facing. It goes to show that risk management is a very challenging aspect of business. As the Sotho saying goes “ Moreku ga a itekole”, we therefore need to look for avenues to share information, best practices, and lessons learned.

13. Ke a leboga Dankie Ngiyathokoza Ke a leboha Siyabonga Inkomu Ndo livhuwa Enkosi Ngiyabonga Ndatenda Obrigado Naa Goodee Asante Merci Zikomo Ta

14. Thank You