Effective risk management activities have evolved throughout the Ontario Public Service since Ontario's Risk Management Policy was put in place in 2002. However, senior officials recently recognized that, although there are pockets of excellence, risk management practices need to be strengthened.

In June 2006, Ontario announced a new structure for the Ministry of Finance's Treasury Board Office. The vision of the new Office is to ensure that the Ontario government's financial and risk management plans and processes meet the highest standards of integrity, accountability and transparency.

CCAF Executive Director Michael Eastman talked to Ontario's Deputy Minister of Finance, Colin Andersen, about the government's plans to implement an enterprise risk management framework.

ONTARIO'S NEW APPROACH TO RISK MANAGEMENT

Finance Deputy Colin Andersen outlines plans for CCAF

Michael Eastman:
Ontario is a huge jurisdiction with a lot of issues to address. Why did the government decide to devote energy and resources to risk management?

Colin Andersen:
Well, the answer is implied in your question. With so much going on, we can't afford to take an ad hoc approach to risk management.

We believe that managing the risks associated with the use of taxpayer dollars is not only a choice but also a responsibility, one for which we are accountable. Good risk management will make an organization more effective and help those charged with governance to discharge their stewardship responsibilities.

In fact, we view effective risk management as a fundamental part of our corporate governance responsibilities and accountabilities, along with strategic planning, quality assurance, performance measurement and analysis, quality assurance and annual reporting.

Michael Eastman:
What do you think needs to be done to strengthen risk management in Ontario?

Colin Andersen:
We're off to a good start since the Risk Management Policy was introduced in 2002, in that awareness of the importance of risk management is high. But we are seeing a lot of inconsistent risk management frameworks developed in silos.

We plan to develop a future direction for risk management in the Ontario Public Service that will take it from being a fragmented exercise to one that is an integral part of the performance framework, that is planned, managed and monitored.

We need to develop a more coordinated and disciplined approach to risk management. We want to ensure that risk management is integrated into our strategic planning and business management frameworks, and addresses cross organizational risks. We also plan to implement a framework with a common language for managing risks.

Michael Eastman:
What role will Treasury Board Office play in this process?

Colin Andersen:
Part of the Treasury Board Office design was to bring Audit, Controllership and Fiscal Planning functions together to ensure a more integrated approach to risk management in all aspects of financial planning.

The next step is for Treasury Board Office to consult decision makers and articulate the risk management objectives of the Ontario government. Then it will review the current Risk Management Policy to ensure it's driving the results that are desired. We want to develop a framework that reflects the risk appetite of the decision makers, and communicate that framework to all levels of the organization.

We will also develop performance measures for the policy. Each ministry, agency and Crown-controlled corporation will be required to develop a business risk profile, based on consistent criteria and risk thresholds. Our risk management people will provide compulsory training and communicate regularly to ensure that everyone concerned has consistent and current information.

Ministries will apply the concepts and tools of enterprise risk management at their level and will report to us the results of their risk management processes.

Michael Eastman:
Will your internal audit people be involved in this initiative?

Colin Andersen:
Absolutely. Ontario Internal Audit, the Office of the Provincial Controller, and Fiscal Strategy and Coordination Division - all part of Treasury Board Office - will be providing advice up front in our assessment of the current state of risk management in Ontario. It will also advise on a change design plan that will address the future vision of risk management in Ontario including the risk management policy and the supporting infrastructure.

Treasury Board Office's teams all have relationships with ministries. They will continue to provide advice, training and support to help ministries during their risk identification, management and reporting processes.

Finally, Treasury Board Office will evaluate the risk management processes of Ontario and provide assurances to senior government officials regarding their effectiveness.

Michael Eastman:
What will you be looking to line ministries to do?

Colin Andersen:
We want ministries to identify potential threats to the achievement of their objectives; assess the impact and likelihood of the threat occurring; assess their controllership capacity; select and implement control and other response activities; and report on risk identification and mitigation strategies and their results.

Michael Eastman:
Thank you very much for taking the time to talk to CCAF and it’s members about this important topic.

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