ERM at skyguide and interface with BCM - Fachveranstaltung Netzwerk Risikomanagement - Aarburg, 8 September 2017 - J. Schulte, Enterprise Risk Manager C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017
Content • overview of skyguide • company • activities and services • enterprise risk management at skyguide • overall ERM process • extended ERM • interface ERM-BCM at skyguide C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 2
Skyguide's synopsis C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 3
Skyguide's shareholders (2015) total share capital CHF 140 millions. Swiss confederation 99,94 % aeronautical associations, 0,06 % airport owners, cantons and cities, unions C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 4
Income statement ANS ( 2016 ) skyguide is 40.7 Mn financed by Routes charges 133.3 Mn CHF 440.1 Mn Landing charges 266.1 Mn Military compensation Routes charges (60.5%) Landing charges for cat. I & II airports (30.3%) Military compensation (9.2%) C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 5
43.6 Safety, Security, Human resources (as of 31 December 2016, in FTE) Quality 898.0 (incl. 546.9 ATCOs) skyguide offers 1'426 full time jobs Operations* 83.1 1000 Finances & Services 323.0 750 Engineering & Technical Services 24.5 Corporate 500 Development 21.0 Human 250 Resources 32.7 Directorate ** 0 Safety, Operations Finances Engineering Corporate Human Directorate Security, & Technical & Development Resources Quality Services Services * including trainees ** includes Corporate Communication and Innovation & Change C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 6
skyguide's locations Munich Civil locations Military locations Zurich Kloten St.Gall Altenrhein Dübendorf Grenchen Emmen Alpnach Buochs Bern Belp Payerne Meiringen Locarno Geneva Cointrin Sion Lugano Agno Lyon Milano C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 7
IFR traffic – all skyguide centres (in number of IFR flights, source : CFMU) C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 8
Swiss and delegated Airspace Karlsruhe 41 % outside CH Munich Reims Paris 59 % Vienne inside CH Padova Aix-en- Milano / Provence Roma C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 9
Content • overview of skyguide • company • activities and services • enterprise risk management at skyguide • overall ERM process • extended ERM • interface ERM-BCM at skyguide C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 10
Skyguide's ERM in a nutshell • Scope of skyguide's ERM - All events that may affect skyguide's ability to achieve its objectives - Whole skyguide organisation (cross-departmental framework) • ERM introduced in skyguide end of 2006 • ERM set up as management tool for prioritizing risks and for supporting risk-based decision making • ERM integrated in skyguide's overall planning process (in particular strategic planning) • ERM composed of 2 fundamental steps : risk assessment and risk response • Risk reviews done twice a year and reported at EB and BoD level • ERM process supported by specific tool (R2C) available throughout the entire company C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 11
Two possible ways for RM Skyguide has chosen to implement a Qualitative RM Need for RM Quantitative RM Qualitative RM • Relies on intuition and know how • Needs a lot of effort/investments of staff • Partly subjective • Huge historical data set required Feasible for SME* Not feasible for SME* * SME = Small and Medium Enterprises C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 12
Added-value of ERM • Through reporting of risks from departments/processes/ projects/programs, get overall view of risk portfolio at skyguide • By improving awareness of RM in skyguide and by using RM as a tool in (daily) management, be able to manage most important risks in a systematic way and hence improve decision- making • Develop measures to manage risks in order to support the achievement of skyguide's objectives C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 13
Process Risk Management Framework : 0 •Risk Policy Statement •Risk Policy Directive •Risk Organisation •Process incl. Methodology •Reporting and Tools 1 Risk Assessment Risk Identification 4 2 5 Risk Monitoring and Communication and Risk Evaluation Training Review 3 R i s k R Risk Treatment e s p o n s e C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 14
Bow-Tie Model 1 Causes (or sources) Consequences (or effects) Causes, event and consequences are described in a risk scenario Consequence 1 Cause 1 Cause 2 Consequence 2 Scope of ERM Event Cause 3 Consequence 3 Cause 4 Consequence 4 Protective Preventive measures measures (action on (action on causes) consequences) Preventive measure act first on Protective measure act first on probability or likelihood impact or consequences A risk scenario should be understood as a "credible worst case scenario" : a remote but not impossible scenario with significant impact C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 15
Risk Evaluation 2 Risk Evaluation • Measure risks – impact (or severity ) : using predefined criteria e.g. financial impact and non financial impact (on corporate and strategic objectives, reputational, etc.) – likelihood (or probability of occurrence) : using the same Risk map time horizon as for severity, order of magnitude (rather than precise number) given by the most knowledgeable people – interdependency and correlation between risks (portfolio effect) C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 16
Risk Treatment 3 Risk Map / Heat Map for Risk Treatment Prioritization and selection of RM measures high 2 1 • Avoid/Eliminate • Accept/Retain/Bear all options may apply depending on all options may apply depending on • Reduce/Hedge/Mitigate nature of risk and risk appetite nature of risk and risk appetite • Insure although Accept/Retain/Bear is limited • Transfer (i.e. outsource) because risk is mostly driven by external factor beyond management control (earthquake, etc.); contingency impact planning vital here 4 3 risks in this quadrant are usually risks in this quadrant are often related Accepted at their present level; risks to day-to-day operations and in this quadrant may be over-mitigated compliance issues (legal and implying that resources could be regulatory); steps should be taken to allocated to other more significant Reduce their likelihood risks low low high likelihood C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 17
Risk Treatment 3 • Avoid/Eliminate I) Avoid/ I) Avoid/ • Accept/Retain/Bear Eliminate Eliminate • Reduce/Hedge/Mitigate Risk Treatment • Insure II) Reduce/ II) Reduce/ • Transfer (i.e. outsource) Hedge/Mitigate Hedge/Mitigate Total Risk Total Risk III) Insure III) Insure Residual Risk Residual Risk Example after Measures after Measures I, II and III I, II and III I) Avoid/ Eliminate ≤ ≤ Costs of Measures Costs of Measures Costs of Total Risk Costs of Total Risk + Residual Risk + Residual Risk II) Reduce/ Hedge/ Mitigate Risk Exposure (how much we Total Risk currently have) III) Insure Risk after Measure I Risk after Risk Tolerance (how Measure I and Residual Risk much we should II after Measures have, how much we I, II and III can bear) C/CE/JS/skyguide & ERM - Presentation to Netzwerk Risikomanagement - 8 September 2017 page 18
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