Managing Risk and Liability

Sponsored by: Campus Y – Social Innovation Incubator UNC-Chapel Hill Division of Finance April 13, 2012

Topics of Discussion

UNC.edu

 Liability • Theory of Negligence  Managing Your Risks • Governance, Risk & Compliance • Enterprise Risk Management  Building Your Risk Management Program • Keys to Success • Getting it Started

2

The Titanic

A One Hundred Year Old Case Study in Risk Management

UNC.edu

1912 - 2012

3

UNC.edu

Theory of Negligence

    A duty of care is owed That duty is breached The breach causes some type of harm There’s direct causation between the duty and harm

4

Governance, Risk & Compliance (GRC) UNC.edu

   Governance • Describes the overall management approach through which senior executives direct and control the entire organization Risk Management • The process through which management identifies, analyzes and responds appropriately to risks that might adversely affect the organization's business objectives Compliance • Conforming with stated requirements

5

Risk Categories

Strategic Risk: Financial Risk: Operational Risk: Compliance Risk: Goals & objectives Loss of assets or stakeholder value Ongoing management process Laws & regulations Political (Sovereign) Risk: Adverse actions of governments Technology Risk: Protecting electronic information Reputation Risk: Tarnishing of image or brand - equity

UNC.edu

6

Risk Management Process

UNC.edu

Follow the basic risk management process: 1.

2.

3.

4.

5.

Identify, classify and assign ownership to your risks Examine your options for handling these exposures Select the best techniques Implement the techniques Monitor, measure and improve Risk management is not the same as risk avoidance. Weigh the costs and benefits of the risk and make responsible decisions.

7

Risk can be categorized by its:   Likelihood Severity of Impact Where it falls on your risk map affects how you manage it

UNC.edu

Mapping Your Risks

8

UNC.edu

Keys to Success

      Support from the top is a necessity Determine your risk appetite Embed risk management into your organization’s fabric Link risk management to your strategic plan and growth Become risk intelligent Risk is fluid, so this is a continuous process

9

Getting Started

    Seek the involvement of senior management • The “Tone at the Top” drives successful risk management Establish a risk management committee • Representation from all areas of your enterprise Conduct an enterprise-wide risk assessment • Focus on the most significant risks at the strategic level Build your program in incremental steps • Focus initially on a small number of top risks; and gradually develop a more mature program

UNC.edu

10

UNC.edu

Questions & Comments

Steve Kenny Director of Risk Management Services Treasury & Risk Management Services University of North Carolina at Chapel Hill Campus Box 1100, 104 Airport Drive Chapel Hill, NC 27599-1100 t. 919.962.7360

[email protected]

11