Senetas Corporation Limited · ASX:SEN
Senetas — Senetas Security Summit 2006
55 slides from Senetas's conference presentation, September 2006
Slide 1: Senetas Security Summit
Senetas Security Summit September 2006 Melbourne, Canberra, Sydney and Wellington Introduction and an Overview of Risk Michael Vincent
Slide 2: Discussion Points
Discussion Points Why risk today The concept of risk The tools of risk The value of risk Risk as a decision tool
Slide 3: Introduction
Introduction Risk is the environment that we live and operate in Identification and analysis of our environment allows decisions to be made within a reasoned framework History repeats itself but we are generational learners
Slide 4: Definition of Risk
Definition of Risk Risks are . . . events that may influence the achievement of an organisation’s objectives. “A ship in the harbour is safe, but that is not what ships are made for.
Slide 5: Integrated Risk Management Framework
Integrated Risk Management “Building Bridges” Mo nito r ing i ca tion & Lea m un rnin Com g Capacity Process & Tools Risk Products Integration IRM Framework Organisational Accountability Culture Country End user
Slide 6: Key Elements
Key Elements Risk consciousness: Nature & extent of risk Regular monitoring & Risk appetite of reporting organisation Cost/benefit Chance & impact evaluation Control and monitoring Annual review and mechanisms report on effectiveness and progress
Slide 7: Why Risk Today
MONASH University Business and Economics
Slide 8: The Risk Trivium
The Risk Trivium Structure Ethics & Outcomes Culture Process
Slide 9: Five Forces Driving Risk
Five Forces Driving Risk Financial Environmental Social Governance Empowerment Government vs. business
Slide 10: Factors
Factors Business deregulation Market choice and market judgment Efficiency Globalisation Shareholder value Competition and flattening structure
Slide 11: What Should We Measure
What Should We Measure Business risks – specific to industry and market in which the firm operates Market risks – adverse movements in market prices or market rates Credit risks – failure of counterparty to make promised payments Liquidity risks – cost or inconvenience of unwinding a positio
Slide 12: The Concept of Risk
MONASH University Business and Economics
Slide 13: Financing Business Risks and Hazard Risks
Debt Data management Consequential Interest rates Physical damage HOLISTIC Services Outsourcing RISK Treasury Personnel MANAGEMENT Controls Criminal Securities Financing War Contracts Controls Duty of Terrorism care State & Outsourcing Federal Product liability Legislation Regulations Statutory liab
Slide 14: Risk Management Is Ongoing
Risk Management Is Ongoing Confirm Identify Prioritise Goals/strategy &Assess Risks Monitor & Report Policy and Communication Take Challenge Necessary Review & Action Evaluate Controls
Slide 15: Risk and Uncertainty
Risk and Uncertainty We know what we know We know what we don’t know We don’t know what we don’t know
Slide 16: Donald Rumsfeld
Donald Rumsfeld The message is that there are known unknowns There are things we know that we know There are known unknowns that is to say there are things that we now know we don’t know But there are also unknown unknowns There are things that we do know that we don’t know And each ye
Slide 17: Risk Management in Perspective
Risk Management in Perspective Mitigation Strategies Known Unknown Unknown “Making Risks decisions with eyes We want wide Known to grow this box. open”
Slide 18: Secure Resilience
Secure Resilience The ability to bounce back from adverse events that have been identified or not identified Reputation and intangible protection benefits Longevity within business cycles
Slide 19: The Tools of Risk
MONASH Universi Business and Seles ' ty
Slide 20: If You Can't Measure It, You Can't Manage It
RISK ANALYSIS IS A MANAGEMENT TOOL – IT ELEVATES THE SECURITY FUNCTION UP TO THE BOARD ROOM “IF YOU CAN’T MEASURE IT, YOU CAN’T MANAGE IT!” --Peter Drucker
Slide 21: Risk Characterisation Methods
Risk Characterisation Methods Quantitative Risk estimates Categorisation Probability distributions Qualitative Subjective prioritisation Basic scenario ranking Criteria-based scenario ranking
Slide 22: The Risk Management Process
The Risk Management Process Establish the Context Communicate and Consult Identify Risks Monitor and Review Analyse Risks Evaluate Risks Treat Risks
Slide 23: The Risk Management Process (AIRMIC, ALARM, IRM)
The The Organisation’s Strategic Objectives Risk Manageme Risk Assessment Risk Analysis nt Process Risk Identification Risk Description Risk Estimation FORMAL AUDIT MODIFICATION Risk Evaluation Risk Reporting Threats & Opportunities Decision Risk Treatment AIRMIC Residual Risk Reporting ALARM IRM Mo
Slide 24: Risk as a Decision Tool
MONASH University Business and Economics
Slide 25: Four Types of Risk
Four Types of Risk Estimating Uncertainty Biases of individuals or organisations Uncertainty in the assumptions underlying the plan Uncertainty in the mechanisms of the influences on the results
Slide 26: Risk Orientation and Risk Acceptability
Risk Orientation and Risk Acceptability Highly Acceptable “Risk Optimiser” Neutral “Risk Reducer” “Risk Avoider” Highly Unacceptable Level of Perceived Risk +
Slide 27: Risk Appetite
Risk Appetite The level of risk that an entity is prepared to tolerate Individual and composite risks fall within set acceptable tolerances Risk acceptance – risk transfer risk elimination – risk avoidance – risk increase – risk acceptance are set by appetite
Slide 28: Risk Appetite
Risk Appetite Must be clearly and explicitly identified and defined Risk optimisation through appetite identification Current and future appetites may well be different Appetite – tolerance and cost associated with key risks = ROI and can dictate cost of capital and capital allocation = appr
Slide 29: Risk Appetite
Risk Appetite Dictates attitude to taking or seeking risk Tolerance = appetite Appetite may vary between divisions and departments – may vary the cost of capital allocation Appetite as identified and defined tolerance is equal to critical risk acceptance e.g. 20% of EBIT or % return on fun
Slide 30: The Business Risk Environment
The Business Risk Environment The optimum place for risk to be managed is at the point that the exposure to risk occurs. Most risks faced by a corporation are best managed in a decentralised way within a centralised policy Coordinated by a professional senior manager with a passion for risk?
Slide 31: Risk Management - The 5 Keys
Risk Management - The 5 keys •Commercial focus: Leadership, accountability, openness, integrity through a clear/up-to-date business strategy based on commercial and business needs •Service delivery: Accountability and effectiveness through setting targets, reporting & measuring performance •Structur
Slide 32: The Building Blocks
The Building Blocks Commercial focus: Annual reports, independent review of financial/operating reporting, consultation strategies, explicit commitment on openness ) Service delivery: performance management frameworks, resource allocations according to priorities and partnerships Structures & proces
Slide 33: Best Practice - From Reactive to Proactive
Best Practice - From Reactive to Proactive Risk Management Best Practice Risk Assessment - Proactive The challenge is to Risk Identification become forward looking, and not ‘reaction’ - ‘Don’t Fire Fighting panic’ Worst Case Crisis Management - Reactive Clean Up Management
Slide 34: The Value of Risk
MONASH Universi Business an d Econom a ' ty
Slide 35: Drivers of Values & Ethics Performance
Drivers of Values & Ethics Performance RESULTS Leadership Achieving High Levels of Values and People Ethics Performance Drivers Organisational Culture Preventing and Risk Assessment,Controls Managing Values and Standards, Recourse Ethics Problems
Slide 36: The Value Proposition
The Value Proposition Better Decisions Better Performance More Value
Slide 37: Ethics and Values Cases: Frequency and Public Profile
Ethics and Values Cases: Frequency and Public Profile Grants & Contributions abuses Contract abuses High Gross waste or Public mismanagement Profile Bribery, corruption, gifts Abuse of State Power/human rights Conflict of interest Travel/Expenses Low Public Fraud, Embezzlement Harassment Profile HR
Slide 38: Knowledge and Ethics for Risk
Knowledge and Ethics for Risk Articulate the values and ethics of Maintain and public service to enhance public guide and support confidence in the public servants in integrity of the all their Public Service professional activities Strengthen respect for the role played by the Public Service within
Slide 39: Code of Conduct Issues
Code of Conduct Issues 1 2 Statement of Public Conflict of Interest Service Measures Values and Ethics 3 4 Post-Employment Avenues of Resolution Measures
Slide 40: Democratic Values For Effective Service Delivery
Democratic Values For Effective Service Delivery Helping Ministers Supporting Honest and under law individual and impartial advice to serve the collective to public interest ministerial Ministers accountability Making all Loyally Providing relevant implementing Parliament and information lawfully ta
Slide 41: Professional Values for the Public Sector
Professional Values for the Public Sector Working Serving with Continual within competence improvement of the law and excellence quality of service, maintaining efficiency respecting cultural political objectivity differences neutrality impartiality Ensuring Ensuring Upholding proper, the means are
Slide 42: Ethical Values of the Public Service
Ethical Values of the Public Service Conserving, Resolving public trust in official duties vs the integrity, private interest objectivity and conflicts impartiality in favour of the of government public interest Acting at all times in such a way as to uphold the Acting public trust Taking at all tim
Slide 43: People Respect and Values
People Respect and Values Exercising Demonstrating Leading by authority respect, fairness participation, and responsibility and courtesy in all openness and with dealings with citizens communication, respect for and fellow with respect for human dignity public servants diversity Treating Fundamental
Slide 44: Conflict of Interest Protection
Conflict of Interest Protection Measures Rules of conduct Methods of Complement Assets compliance values Gifts, hospitality Outside Preferential and other employment or Solicitation treatment benefits activities
Slide 45: Post-Employment Measures
Post-Employment in need Measures All Measures public servants Rules of conduct complement should respect the Public Service spirit of the values measures Agency Heads Measures may designate pertain specifically other positions as To need subject to measures
Slide 46: Resolution Pathway
Resolution Pathway Public Servant Issues to Experiencing an Ethical Dilemma Witness of clarify and wrongdoing or questions to breach of discuss the Code Refer to the Code and the Refer to the Code Steps Stepsof ofreasoning reasoning Policy on Internal Disclosure Disclosure of wrongdoing Dialogue or
Slide 47: Responsibilities and Accountabilities
Responsibilities and Accountabilities Public Servants Agency Heads Ensure mechanisms Exemplify in their are in place to help actions and behaviour public servants the values of discuss/resolve public service Comply issues with Code: A condition of Can delegate employment responsibilities and authori
Slide 48: Responsibilities and Accountabilities (cont)
Responsibilities and Accountabilities (cont) Public Service and Human Resources Public Service Values and Ethics Advisory Disseminate support on the information and interpretation educational Review, and promotion of materials the performance of a Code agencies through the management accountability
Slide 49: Responsibilities and Accountabilities (cont)
Responsibilities and Accountabilities (cont) Public Service Human Resources Integrity Officer Management Receive, Advisory record Disseminate support on the and review Make information and interpretation educational disclosures of recommendations and promotion of wrongdoing and for resolution materi
Slide 50: Competing Public Service Values
Competing Public Service Values The democratic the democratic duty to support duty to support individual must be balanced with the collective ministerial accountability of accountability the ministry The professional duty to The “people” must be balanced with continually value of respect improve eff
Slide 51: Reconciling Conflicting Values
Reconciling Conflicting Values Public Servant Values-based Experiencing an Ethical Dilemma Values bearing decision or on the judgment decision to be made are in conflict Consider all competing Trade-offs needed Steps of relevant to reconcile views, reasoning competing interests interests are guided
Slide 52: The Hidden Value Proposition: Risk, Return, Regret
The Hidden Value Proposition Risk Return Regret
Slide 53: Pathway to Regret
Pathway to Regret Unease Disappointment Regret The quicker we act the less the impact
Slide 54: Question
Question How can we manage our future from the relative safety of today?
Slide 55: Questions Please?
MONASH University Oy Questions Please?