Risk Appetite Discussion

25 Pages·2017·1.05 MB·English

by  Rebecca Phillips

Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
38th Board Meeting
Risk Appetite Discussion
GF/B38/23
Geneva, Switzerland
14-15 November 2017
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
Session objectives
• Over the past several months, significant work performed to develop the
high level Risk Appetite Framework through consultation within the
Secretariat and the board committees
• The purpose of today’s session is to share the work underway on this
subject and get your input on how to best move it forward including
opportunities for committee and constituency engagement
• The goal is to reach a decision point on Risk Appetite to be submitted for
May 2018 Board meeting
1
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
Content Overview
1. What is Risk and Risk Appetite and why it is important
2. Current Risk Management Framework
3. How does Risk Appetite support Grant Objectives
4. Adapting Risk Appetite Approach to the Global Fund Context
 Defined key risks and countries
 Resulting matrix from consolidation of 25 countries
 Indicative Board Decision Point on Risk Appetite
5. Key Aspects of Risk Appetite and how it Drives Decisions
6. Next Steps
2
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
1. What is Risk and Risk Appetite and why it is important
2. Current Risk Management Framework
3. How does Risk Appetite support Grant Objectives
4. Adapting Risk Appetite Approach to the Global Fund Context
 Defined key risks and countries
 Resulting matrix from consolidation of 25 countries
 Indicative Board Decision Point on Risk Appetite
5. Key Aspects of Risk Appetite and how it Drives Decisions
6. Next Steps
3
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
What is Risk Appetite and why it is important
Risk Appetite is the amount of risk, at a broad level, an entity is willing to
Definition of
accept in pursuit of its objectives. It reflects the entity’s risk management
Risk Appetite
philosophy, and in turn influences the entity’s culture and operating style.
 Set by the Board
 Aligns with strategic objectives
 Implications of levels set are clearly articulated including resource allocation
 Drives consistent and transparent risk-reward trade-offs
Characteristics
 Is specific and actionable by the Secretariat and aligns stakeholder
expectations
 Can be measured and aggregated for reporting or disaggregated for
implementation
A well documented and operationalized Risk Appetite will enable the Secretariat
Importance to be better informed and more confident in taking appropriate (higher or lower)
levels of risks to achieve the objectives of the Global Fund.
4
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
Difference between Risks and Strategic Objectives
Definition of Risk is an uncertain event or condition that, if it occurs, will interfere with
Risk achievement of strategic objectives.
Strategic Objectives influence the level of risk we should be willing to
take (Risk Appetite).
Objective Appetite
We have higher risk appetite for most operational risks (other than say
Mission fraud or quality of health products) to achieve our strategic objectives in
High Impact and large Core countries.
We have even higher risk appetite for operational risks (other than say
Delivering
fraud or quality of health products) to achieve our objectives in fragile and
COE
challenging operating environments.
The higher the disease burden, the higher our risk appetite to enable
successful delivery of our mission.
5
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
1. What is Risk and Risk Appetite and why it is important
2. Current Risk Management Framework
3. How does Risk Appetite support Grant Objectives
4. Adapting Risk Appetite Approach to the Global Fund Context
 Defined key risks and countries
 Resulting matrix from consolidation of 25 countries
 Indicative Board Decision Point on Risk Appetite
5. Key Aspects of Risk Appetite and how it Drives Decisions
6. Next Steps
6
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
Current Risk Management Framework
The grant related risks are thought along … and operationalized through the
the following broad risk categories… following risk management process.
 Program Quality & Efficiency Current Risk Level
Current Risks
 Strategic Data Quality & Availability
Root Causes
 Procurement
Time
 Supply Chain
Mitigating Actions
 Quality of Health products Resources Trade-off
 Financial Fraud & Fiduciary Assurance Activities
 Financial Capacity & Reporting by Countries
Residual Risks
 Grant Oversight (at PR Level) Residual Risk Level (after mitigating actions*)
*Mitigatingactionsareinfluencedbymanagementriskappetite
7
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
1. What is Risk and Risk Appetite and why it is important
2. Current Risk Management Framework
3. How does Risk Appetite support Grant Objectives
4. Adapting Risk Appetite Approach to the Global Fund Context
 Defined key risks and countries
 Resulting matrix from consolidation of 25 countries
 Indicative Board Decision Point on Risk Appetite
5. Key Aspects of Risk Appetite and how it Drives Decisions
6. Next Steps
8
Global Fund 38th Board Meeting, 14-15 November2017, Geneva, Switzerland
How does Risk Appetite support Grant Objectives
Illustrative
Grant Objectives Current Risk Mitigating
Grant Related Risks
Risk Level Appetite Action
 Program Quality & Efficiency N
s
e
it  Strategic Data Quality & Availability N
iv
it
c  Procurement N
A

t
n  Supply Chain N
a
r
G
 Quality of Health products Y

y
r
tn  Financial Fraud & Fiduciary Y
u
o
c  Financial Capacity & Reporting by Countries N
-
n
I  Grant Oversight (at PR Level) Y
Mitigating Actions are influenced
by the Risk Appetite
Mission
Objectives of
the Global Fund
 - Very High |  - High |  - Moderate |  - Low/Moderate |  - Low
9