Healthcare Case Study

Public Hospital


"The clear definition of enterprise risk elevated the discussion of ERM from merely tactical to truly strategic."

The Situation:

A hospital wanted to hasten the implementation of its Enterprise Risk Management (ERM) model. The senior management team also wanted to respond to the Board of Directors’ request for a more formal approach to ERM, including assurance that the organization’s key enterprise risks were identified, quantified and well managed.

What we did:

Risk Wise conducted a Risk Management Diagnostic including an assessment of the organization’s ERM capabilities, risk culture and risk management practices. The results of the risk management diagnostic were summarized in an ERM capabilities report that highlighted the strengths and weaknesses in the organization’s current ERM practices. The ERM capabilities report provided the senior management team’s with an informed starting point to develop an ERM framework that would bring to life what had hitherto been a conceptual ERM model.

Risk Wise worked collaboratively with the senior management team to develop the key components of an ERM framework that enabled the hospital to operationalize its ERM model. Diana Del Bel Belluz facilitated the ERM framework development workshop and Patricia Fryer provided subject matter expertise in healthcare risk management. Diana also led a second workshop to facilitate the development of the organization’s ERM implementation plan.

Over the course of the two workshops, Diana led the management team in the development of these key ERM framework components:

  • a definition of enterprise risk management (versus operational risk management) that captures the organization’s unique view of enterprise risk.
  • an enterprise risk assessment methodology to determine the key risk exposures and the effectiveness of existing risk management strategies. The methodology was embedded in practical tools that provide a basis for consistent and transparent assessment of risks.  The senior management team calibrated the ERM assessment tools to reflect the organization’s particular risk appetite and business context.
  • skills in identifying, assessing and evaluating enterprise risks were developed by the team during the course of the workshops
  • a strategy to efficiently integrate Enterprise Risk Management into business practices, beginning with the strategic and annual planning processes
  • a strategy for integrating into corporate reporting structures updates on: (a) enterprise risk exposures and (b) the ongoing development of risk management capabilities

After the workshops, Risk Wise provided:

  • an ERM Implementation Guide that documented the hospital’s ERM model and the new processes and tools to assess and manage enterprise risks. The guide also provides step-by-step instructions on how to implement each stage in the hospital’s ERM model.

Results:

The project enhanced the hospital’s ERM capabilities in the following ways:

  • The explicit definition of what constitutes an enterprise risk for this organization has enabled a coherent and focused discussion of strategic risks.
  • Thanks to the ERM tools developed in this project, the senior management team is equipped to identify and assess their key risk exposures and to evaluate the effectiveness of their risk management strategies. As a result, the hospital management team can fine-tune its risk management strategies to adapt to changes in the business environment.
  • The management team developed skills in enterprise risk identification and assessment. These skills will be reinforced each time they assess the hospital’s enterprise risks.
  • The risk assessment tool was designed to be compatible with the organization’s Balanced Scorecard. Therefore, the hospital can easily add a risk lens to the organization’s quarterly Balanced Scorecard updates, enabling timely reports to the board on the organization’s risk exposures. This information will provide a solid basis for informed discussions at the Board table about key enterprise risks.
  • The new ERM tools and the strategy to efficiently integrate them into the hospital’s business practices has transformed ERM from a conceptual model into an active cycle of continuous improvement.

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