Summary of Introduction to Risk Management

00:00:00 - 00:50:00

In this video, the speaker emphasizes the importance of risk management in achieving strategic objectives for First Nations. They discuss the different types of risks, identify common risks that organizations may encounter, and guide the audience through a four-phased approach to risk management. The approach involves identifying potential risks and their impact, evaluating risks based on likelihood and impact, creating a risk management plan, and monitoring and reporting on progress. The video also stresses the importance of involving the right people and ensuring that the risk management plan is a living document that is ingrained in the organization. Additionally, the speaker highlights the importance of evaluating potential risks systematically, creating a risk dashboard, assigning an owner to each risk, and setting a timeframe for action. Finally, the video encourages First Nation leaders to engage in brainstorming sessions to identify all the risks their community faces and emphasizes the importance of inclusivity and having a process for feedback from staff at the departmental level to support decision-making that achieves the organization's strategic objectives.

• 00:00:00 In this section, the speaker introduces the concept of risk management and discusses different types of risks, such as financial risks and catastrophic risks. They also provide a list of common risks that organizations may face, including culture and language, land use, and the environment. The speaker emphasizes that risk management is essential for achieving strategic objectives and guides the audience through a four-phased approach. Additionally, they clarify that having a risk management plan in place is not necessary to benefit from the webinar. The section concludes by defining risk as the possibility of negative events that may prevent an organization from achieving its objectives and highlighting the importance of identifying hidden risks.
• 00:05:00 In this section, the speaker discusses the idea that risks can actually be opportunities, and that better management of risks can result in better outcomes for First Nations in terms of meeting strategic goals, making better decisions, and allocating resources more efficiently. However, this means identifying potential risks associated with any given opportunity, and being prepared to manage those risks, even if it means changing the way you think about something. The speaker recommends starting with a formal strategic plan before looking at risk management, but acknowledges that many First Nations may start with their priorities and move forward from there. Ultimately, it's important to involve the right people in identifying risks and evaluating the likelihood and impact of those risks in order to determine the best way to manage them.
• 00:10:00 In this section, the speaker discusses the importance of risk management in achieving strategic goals for First Nations. They explain that risk management involves looking at a universe of risks and prioritizing them based on their potential to stop the First Nation from achieving its goals. Different risks are managed at different levels of the organization, with organizational risks being managed at the Council and senior management level, and financial and operational risks being managed at the finance and audit committee and departmental level respectively. It is important to have policies, procedures, and rules in place to manage risks and to ensure that risk management is a live document that is ingrained in the organization.
• 00:15:00 In this section, the speaker discusses the risk management process, which involves several stages. The first stage is brainstorming and identifying all possible risks and their impact, which is done using a template provided by the organization. The second stage is evaluating all identified risks and rating them based on their likelihood and impact. The highest risk, highest impact, and moderately likely risk are managed and monitored, but generally, all operational risks get minimized advantage through control structures in place. Lastly, a risk management plan is put together, and key risks are managed. The process is continuous and is revisited every year, with quarterly reporting on any changes or progress made.
• 00:20:00 In this section, the speaker discusses the importance of understanding other priorities when planning risk management initiatives, and involving Chief and Council, Finance and Audit Committee, band managers, CAOs, and Senior Financial Officers in brainstorming sessions. The second stage of the process involves evaluation, which requires creating a list of risk statements and using a likelihood and impact spectrum to determine the chance and potential impacts of each risk. The evaluation process can be tricky, as it involves not only quantifying financial costs but also considering potential impacts on community members and cultural values. The example of a forestry client whose economic development manager observed a machine being used improperly highlights the importance of being aware of risks and taking steps to mitigate them.
• 00:25:00 In this section, the speaker discusses the importance of evaluating risk and the impact it could have on a business. They use an example of a small First Nation where a practice of writing blank cheques had been going on for several years, and during an audit, it was discovered that half a million dollars had gone missing. The lack of controls and procedures resulted in a catastrophic event and highlighted the importance of evaluating risks systematically. The speaker also addresses the timeline for the process, stating that it should be integrated into regular planning and could take up to two months to complete. Moreover, risk evaluation should be taken seriously and monitored and reported on quarterly.
• 00:30:00 In this section, the speaker discusses the risk dashboard, which is populated automatically from the risk register and helps identify the highest-ranking risks. The red risks signal the most critical risks that need to be managed, and the orange risks represent moderately monitored risks that would have a moderate impact if they happened. The green risks represent operational risks that get managed through controls, policies, and procedures at the staff level. The risk management plan can include developing other ways to fund a program using a portion of your own source revenues for core cultural programs. It's essential to create a risk management plan and ensure that they are on Chief and Council's, Finance and Audit Committee's agenda, and on their radar screen. The risk dashboard is something that should be looked at quarterly at a minimum.
• 00:35:00 In this section, a CFO shares his experience with the risk management process and how it helped his team recognize the need to make changes to their funding strategy. The risk management plan involves assigning an owner to each risk and setting a timeframe for action, which should be tailored to the specific circumstances of the organization to avoid the common pitfall of not capturing all the risks that could impact the organization. The three risk management strategies are avoidance, where the activity is stopped, mitigation, where policies and procedures are put in place to minimize risk, and transfer, where risk is shared or insurance coverage is obtained. Examples of each strategy are provided, including the CFO's organization reducing donations to fund a program and entering into partnerships to finance projects.
• 00:40:00 In this section, the video discusses the four areas of risk management: avoiding, mitigating, sharing, and accepting risks. It gives an example of a municipality entering into a service agreement with another close by to share the risk of maintaining water treatment equipment. The video also emphasizes the importance of Chief and Council providing input in the risk assessment stage and improving the risk management plan on an annual basis. The Finance and Audit Committee is also crucial in providing input from a financial reporting perspective and minimizing fraud risks. The Senior Manager is responsible for ensuring that the risk management plan is prepared and updated on a quarterly basis and presented to the Finance and Audit Committee. The Senior Financial Officer focuses on controls in place related to fraud and financial reporting.
• 00:45:00 In this section, the speaker emphasizes the importance of incorporating approved procedures into the risk management plan to identify higher risk activities, as well as ensuring that the plan is a living document, not meant to sit on a shelf. Monitoring the plan and being consistent with a four-phased approach across the organization is also key to success. It's essential to focus on risks that matter the most and align monitoring to those risks to avoid tripping over a mountain that can stop progress. Additionally, the speaker stresses the importance of inclusivity and having a process for feedback from the staff at the departmental level to support decision-making that achieves the organization's strategic objectives.
• 00:50:00 In this section, the speaker encourages First Nation leaders to engage in brainstorming sessions to identify all the risks their community faces, as it is vital for effective risk management. The speakers also provide their contact information and invite listeners to reach out to them with any further questions.