Homework Assignment - Week 3

School of Computer & Information Sciences

ITS 835

Chapter 15, “Embedding ERM into Strategic Planning

at the City of Edmonton”

This is a narrated presentation.

Overview

• City of Edmonton

• Links to Strategic Plan and to Other Strategic Tools

– Results-Based Budgeting

– Capital Budgeting Model

• Selecting and Testing a Strategic Risk Management Model

• Initial Planning

– Initial Planning

– Step 1: Identifying Strategy

– Step 2: Identifying Key Risk Elements

– Step 3: Score Risk Elements

– Step 4: Link Programs, Initiatives, and Risks

– Step 5: Determine Indicators and Mitigation Actions

• Recommended Strategic ERM Model

• Outcomes and Lessons Learned

• Conclusion

City of Edmonton

• The City of Edmonton, capital of the western Canadian province of Alberta, has been a meeting place

since the end of the last Ice Age. First settled by Europeans as a fur-trade post in 1795, Edmonton has

grown incrementally, driven by prairie settlement in the 1880’s, rail connections in 1891 and 1905,

and the Klonelike Gold Rush of 1897.

• Edmonton has grown, as of 2013 a city of over 800,00 anchoring an Alberta capital region of over 1.1

million. City experiencing nation-leading economic and population growth as is expected to reach

over 900,000 or more by 2018.

• Constitutionally, municipalities in Canada are the responsibility of their respective provincial

governments. The City of Edmonton is subject to provincial legislation, mainly the Alberta Municipal

Government Act.

Links to Strategic Plan and to Other Strategic Tools

• Questions to ask when developing an ERM

1. What are out long-term vision and goals?

2. What strategy will help achieve the vision?

3. What objectives will achieve the strategy

4. What performance measure will show whether the objectives are achieved?

5. What risks will interfere with achievement of the objectives?

Results-Based Budgeting

• ERM assists in resource allocation decisions and so was seen to conflict with budgeting models

Capital Budgeting Model

• Sophisticated risk management models for maintaining and replacing current capital assets

Links to Strategic Plan and to Other Strategic Tools

• Questions to ask when developing an ERM

1. What are out long-term vision and goals?

2. What strategy will help achieve the vision?

3. What objectives will achieve the strategy

4. What performance measure will show whether the objectives are achieved?

5. What risks will interfere with achievement of the objectives?

Results-Based Budgeting

• ERM assists in resource allocation decisions and so was seen to conflict with budgeting models

Capital Budgeting Model

• Sophisticated risk management models for maintaining and replacing current capital assets

Selecting and Testing a Strategic Risk Management Model

Strategic

Project

Operations

The Ways

Short to medium

term, finite

start/end

Day-to-Day

Initial Planning Identify Strategy

• The Way We …Goals

• The Way We … Strategic Objectives

Identify Key Risk Elements

• ISO 31000-based checklist

• Identify Risks

Score Risk Elements

• Rate Impact and Performance against strategic objectives

Rate Impact and Performance

• Rate Impact and Performance against strategic objectives

Determine Indicators and

Mitigation Action

• Identify risk indicators

• Determine risk mitigation actions

Step 1: Identifying Strategy

• Edmonton had a 30-year strategic plan, The Way Ahead. Using input from the public as well as

subject matter experts, The Way Ahead was approved.

• The document made strategy identification straightforward. It was considered the best place to start

because it was the most homogeneous of the plans; responsibility for its implementation was

overwhelming.

• ERM team decided which levels the strategic weightings were to occur. Options included six 10-year

goals or the 19 strategic objectives.

• Goals were placed on the vertical axis, with strategic objectives across the top.

• The objectives were then transposed to another table where they formed the vertical axis, then

sorted by their percentage of the total objective weighting with the highest weightings at the top

Step 2: Identifying Key Risk Elements

• Using a risk category checklist (a list of categories of potential risks covering all possible types of risks)

Step 3: Score Risk Elements

• Scored risk to each strategies objective, from 1 to 5, provides two outputs: the scoring of risks and

the risk weighting of each strategic objective.

Step 4: Link Programs, Initiatives, and Risks

• Program levels could have been used, such as that used in the city’s results-based budgeting (RBB)

initiative. This initiative divided budget-level programs into smaller components, which would be

easier to change but increase the number of programs.

Step 5: Determine Indicators and Mitigation Actions

• Completion of risk indicator worksheet for each risk/strategic objective combination.

Recommended Strategic ERM Model

•Identify linages between goals and objectives

•Goal from the Ways

•Objective from The Ways

Weight Goals and Objectives

•Identify risks to strategic objectives (from the Ways plans) using risk universe checklist

Identify Risks

•Determine likelihood and impact of risks to strategic objectives

•Prioritize risks by weighting (likelihood x impact x weighting)

Assess Risk

•Determine appropriate actions, assign to risk owners, and follow upDetermine

Mitigations

Outcomes and Lessons Learned

• Buy-in by Senior Management

• Culture of Innovation (Risk-Smart)

• Consistency Model across the Ways

• Resource Requirements on Department Subject Matter Experts

• Departmental Accountability for Key Risks

Conclusion