Enterprise Risk Management Scott Moss, CIS P/C Trust Director

Maryam Z. Sherkat, MIABC Legal Counsel & Risk Officer

Mayor Teunis Westbroek, MIABC Board Chair

Outline ERM Frameworks Why CIS is Involved in ERM CIS ERM Efforts Risk Register and Ranking Risk Map CIS ERM Next Steps DART Challenges Outcome Improvements

What We Are Not Talking About

Not a class in ERM details Selling ERM Capital Modeling ERM

‒ Solvency II

‒ Own Risk Solvency Assessment (ORSA)

ERM Frameworks

RIMS Maturity Model UK & Australia standards of ERM COSO ISO 31000 (CIS follows this model)

ERM Framework 1. Establish the internal

and external context2. Risk assessment3. Risk treatment4. Monitor results5. Communicate and

consult with internal and external stakeholders

Why Is CIS Involved in ERM?

Be an example for members Good management Framework for decisions Explicitly address uncertainty Desire to continually improve Destined to be the future of risk

management

CIS ERM Efforts

1. Organizational Wide Assessment

2. Decision Making

3. Capital Modeling Using ERM

4. ERM Tools for Members

Risk Register & Ranking

Governance Operational Public Image Compliance Technology Hazard Human

Resource

Financial Business Model Political Competition Underwriting Reserving/Claims Reinsurance

Risk Map

FinancialBusiness ModelPoliticalCompetitionUnderwritingReserving/ClaimsReinsurance

2.5 3 3.5 4 4.5 5 5.50

1

2

3

4

5

6

4

5

5

2

4

3

3

5

4

3

CIS Risk Map

Impact/Severity

Likelihood/Frequency

CIS ERM Continuing

1. Assign “Risk

Owners”

2. Develop Mitigation Plans for each risk

3. Establish “Early

Warning Indicators”,

Benchmarks, and

Dashboards for each risk

4. Using ERM

Decision Model in

major decision

Decision Assist Risk Tools (DARTs)

Member-focused ERM services and tools: ERM Framework ERM Consulting Executive Risk Management Team Sample Risk Registers Sample Risk Mitigation Plans Sample Monitoring

Challenges

Definition of ERM not consistent

Does ERM “fit” in public sector?

Board understanding value

Members not having the resources or desire to practice ERM

Challenges

Cutting edge for pools in US

Not required by auditors or regulators

Results are unclear

Outcome Improvements

1. Enhance skills to make decisions with opportunities and threats.

2. Formal risk owners and risk mitigation plans.

3. Better monitoring of risks with early warning flags, benchmarks, and dashboards.

Why is the MIABC involved in ERM?

Initially, because it was required by our

regulator

Advanced Risk Management

Traditional RiskManagement

Enterprise-wide Risk Management

Risk is bad – focus is on transferring risk

Risk is an expense – focus is on reducing cost of risk

Risk is uncertainty –focus is on optimizingrisk to achieve goals

Evolution of Risk Management

MIABC ERM Process

MIABC ERM Framework

MIABC Working Groups

MIABC Mitigation Plans

Board has ultimate responsibility for overseeing the MIABC’s risk profile.

The MIABC’s management team oversees the ERM program.

Risks are to be managed within the Board’s risk parameters, expressed as a “Risk Appetite Statement” (RAS).

The RAS is the organization’s overarching attitude towards risk-taking.

Board’s Role in the ERM Program

MIABC Strategic Plan

Challenges Commitment to and understanding of ERM

both at Staff and Board level.

After initial progress, momentum slowed.

Quantifying risk rating and measuring progress.

Continued monitoring and assessment.

Benefits

Evolved approach to be more proactive with respect to risk management.

Identified areas of concern that needed to be addressed.

Enhanced focus of resources and efforts.

Benefits

Encouraged cross-departmental interaction and cooperation.

Identified risks of not undertaking certain activities and initiatives.

Closing

“Risk management needs to be interwoven into all aspects of a firm’s business and should be a part of the calculus of all decision-making.”

— Dr. Randall S. KrosznerGovernor, Federal Reserve Board

Contact Information

Scott Moss CIS P/C Trust Directorsmoss@cisoregon.org503-763-3800

Maryam Z. SherkatMIABC Legal Counsel & Risk Officermsherkat@miabc.org604-449-6356