Enterprise Risk Management (ERM)

What is ERM?

Enterprise Risk Management (ERM) is UCAR"s comprehensive program to proactively and continuously identify and manage risks that could affect the organization"s ability to achieve its goals and objectives.

Enterprise Risk Management

Frequently Asked Questions

ERM Program Manual (PDF)

 

Why is ERM relevant to UCAR?

As with universities or organizations within the private sector, UCAR operates in an inherently risky environment. The list of potential risks includes financial, operating, strategic, regulatory, environmental, reputational, political, and a range of other types of risk. Managing this portfolio of risks is especially important to help ensure that UCAR can continue to work toward its vision as a world-class research center that leads, promotes, and facilitates innovation in the atmospheric and related Earth and Sun systems sciences. By strategically managing risk, we can reduce the chance of loss, create greater financial stability, and protect our resources.

What is UCAR's approach toward ERM?

UCAR’s approach to risk management has been developed to support the key requirements of responsible corporate governance.  It is an important management discipline that helps to ensure that UCAR achieves the goals and objectives that are set by both NCAR and UCAR. This approach ensures that:

  • Risk management supports strategic planning and decision making.
  • Managing risk is a transparent process that provides management, auditors, and board members with access to information on current risks and how they are being managed.
  • There is consistency in the process for regular risk review, documentation and reporting as circumstances change and are acted upon.
  • There is clear accountability for risks.  Each risk is assigned an individual owner who is responsible for assessing, evaluating, reviewing, reporting and managing controls.
  • Appropriate innovation and progress is encouraged.
  • Risks are managed in a balanced way to avoid surprises without becoming bogged down in details.
  • Adequate resources are assigned to risks and controls to ensure satisfactory results.

Successful risk management helps UCAR to manage challenges, organizational changes and regulatory changes to better deliver on its mission.  The Board of Trustees, President’s Council and Senior Management are advocates of the risk management process and provide the framework for risk management process to work.  UCAR’s approach to risk management ensures that there are controls and actions in place to mitigate risks, along with resources needed to succeed in managing risks.

Roles and Responsibilities

The UCAR President retains ultimate responsibility for risk management.

  • Determines the appropriate level of risk that UCAR is willing to accept. 
  • Presents current risk register and detailed reports to the Audit and Finance Committee or the Board of Trustees upon request.

The ERM Steering Committee (ERM-SC) roles and responsibilities are currently being handled by President’s Council (PC) who have been delegated by the President with responsibility for overseeing risk management activities at UCAR.

  • Approves appropriate risk management procedures throughout the organization.
  • Owns and manages enterprise level risks for the organization.
  • Reviews the risk register regularly and delegates appropriate actions as needed.
  • Considers adding or dropping risks from the risk register.
  • Acts as risk champions throughout UCAR/NCAR/UCP.
  • Ensures that managing risks is integrated with other UCAR processes.

The Audit and Finance Committee of UCAR’s Board of Trustees collaborate with UCAR management in monitoring key risks and report to the Board of Trustees on assurances concerning the management of risks within UCAR.

The Enterprise Risk Manager is responsible for ensuring that risk management activities are carried out effectively throughout UCAR in accordance with the risk management policy and procedures.

  • Maintains risk register and risk data in JCAD CORE system.
  • Advises President’s Council on ERM best practices.
  • Supports the regular review of risk management policy and procedures and makes recommendations.
  • Produces regular reports for the Board of Trustees, President’s Council, and risk and control owners.

ERM Points of Contact (ERM-POC) will be appointed by lab/program/department Directors to serve as local go-to contacts for all ERM matters in their lab/program/department, and to guide the development of localized risk registers and risk control plans. Localized risk registers are updated at least twice a year and provided to the Enterprise Risk Manager for review, consolidation, and reporting to the ERM Steering Committee.

A Risk Owner is assigned to each risk. A Risk Owner is responsible for the management of the particular risk and ensuring that appropriate and effective controls are in place and operating as intended. It is the Risk Owner’s responsibility to provide the President and the Risk Manager with information to report to the Audit and Finance Committee on progress toward mitigation control plans and the results of any new risk assessments.

A Control Owner is assigned to each mitigation control plan or activity.  It is the Control Owner’s responsibility to provide the Risk Owner with regular updates on the progress and effectiveness of mitigation activities.  The Control Owner also reports on control failures and incidents that affect risks to goal achievement.

All Staff are expected to maintain an awareness of the need to manage risks when making decisions and in day to day operations.  Staff share responsibility for identify risks and reporting them to their supervisor, especially during periods of change to processes or operations. 

Risk Assessment Process

 

1: Risk identification

Risk identification requires documenting reasonably foreseeable risks that have or may have a significant impact on the organization. Risks may arise from the possibility that opportunities will not be realized, or from the possibility that threats will materialize, mistakes made, or damage/injury occur.

Structured risk identification and review sessions should take place at least once a year in labs/programs/departments.  As new risks are identified during the normal course of work they should be managed immediately and reported by staff to senior management for assessment and possible inclusion in the risk register.  The result of the risk identification process is a comprehensive list of risks known as a risk register.

2: Risk analysis

A thorough analysis needs to be documented for each identified risk, and should include the following information:  summary of the risk, detailed description of the risk, impact, likelihood, risk exposure, risk category, goals that are affected, risk source, triggers, consequences, current controls, effectiveness of controls, new controls, risk owner, date risk was added, date risk was reviewed, and a time interval for reviews.

Risks are identified using the following root-cause categories: external, people, process, relationships, or systems.

3: Risk evaluation

Risk evaluation prioritizes risks resulting in identification of risks that require the most attention or additional attention. The level of risk determined in the analysis process is compared to risk criteria using the following options:

Impact – insignificant, minor, moderate, major, and critical

Likelihood – rare, unlikely, possible, likely, and almost certain

When assessing likelihood, note that the likelihood score for a risk needs to reflect the likelihood that the impact may occur, rather than the likelihood of the risk occurring. 

Risk prioritization is determined within the JCAD CORE tool by combining the impact ranking and likelihood ranking, resulting in a risk exposure of either very low, low, medium, significant, or high, that can be plotted on a heat map matrix.

The exposure ranking of a risk determines:

  • The nature of further action that is required, and the urgency with which mitigation action should be undertaken.
  • The reporting requirements for the risk, including who the risk is reported to.
  • How often the risk is monitored.

4: Risk controls

Controlling risks involves identifying the options for treating each risk, evaluating those options, assigning accountability for oversight, preparing risk treatment plans and implementing them.

Many practical options are possible for mitigating risks, and all should be considered before deciding on an action plan. 

5: Risk monitoring and reporting

Regular monitoring of risks and risk control action plans is an essential part of the risk assessment process. On a regular basis, risk owners need to ensure that new risks are identified and considered as they arise, and that existing risks are being monitored for changes that may need additional mitigation.  Risk control owners need to monitor existing controls to ensure that they are in place and performing as planned. There needs to be ongoing conversation between risk owners and control owners to ensure that the complete risk environment is being managed to expectations.  Risk information needs to be communicated through the President or his/her designee to the Audit and Finance Committee, who then will bring significant risk issues to the attention of the Board of Trustees.

By adhering to this risk management assessment process, UCAR will be better able to anticipate and respond to events that might otherwise cause damage.   In many cases, the implementation of a robust ERM program contributes to better communication throughout the organization, improved overall compliance, and a more agile organization better able to react to change and opportunity.

The role of the ERM-SC in their review of risk owner’s reports is to advise the President on acceptability and relevance of the controls detailed in the reports.

The role of the Risk Manager is to draft an regular ERM report for presentation at the Board of Trustees meetings.

The risk monitoring and review process should proceed continuously throughout the year according to an established schedule, with risk owners supplying risk and control reviews and updates to the Risk Manager.

To ensure proper management of risks at a strategic level, President’s Council will regularly review the risk register to ensure:

  • New risks to UCAR are identified and considered.
  • Existing risks are monitored to identify any changes which may have an impact.
  • Risks have been properly assessed and recorded in the risk register together with relevant information such as existing risk controls.
  • An appropriate person has been identified for all new risk controls and new risk controls are being implemented according to the planned schedule.
  • Existing risk controls are operating effectively. 

 

Glossary of terms

category

Type of risk, expressed in broad terms, such as: financial, operational, or strategic, etc.

consequence

see "impact"

control

Also known as "treatment." Process, policy, device, practice, or action which may or may not modify risk

event

Occurrence or change in a set of circumstances

goal

The purpose toward which an endeavor is directed.

impact

Also known as "consequence" or "severity." Outcome of an event affecting objectives

likelihood

Chance of something happening

objective

A specific, measurable target

owner

Individual or group of individuals accountable for and with authority for managing risk

priority

Also known as "exposure." Magnitude of a risk, expressed in terms of the combination of likelihood and impact

risk

The effect of uncertainty on objectives

risk analysis

Process of fully understanding the nature of risks and the level of risks

risk assessment

Overall process of risk identification, analysis, and evaluation

risk criteria

Terms of reference against which a risk is evaluated

risk evaluation

Prioritization of risks.  Comparing the results of risk analysis with risk criteria to determine whether the risk is acceptable

risk identification

Process of recognizing and describing risks

risk management

Coordinated activities to direct and control the organization's efforts with regard to risk

treatment

see "control"

trigger

an event or circumstance with potential to initiate a risk event

(Adapted from ISO Guide 73:2009 - Risk management - Vocabulary. Additional terms are defined at this source.)

 

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President's Office Contacts

Antonio J. Busalacchi
UCAR President
+1 303.497.1652

Susan Montgomery-Hodge
Executive Assistant
+1 303.497.1653