Risk management is assigned to different departments depending on the needs and organizational structure of each public agency. In this session at the PARMA 46th Conference and Expo, panelists discussed various organizational structures and their related pros and cons.
- Steve Robles, Assistant Chief Executive Officer for Risk Management and Privacy, County of Los Angeles
- Scott Mann, Risk Manager, City of Sunnyvale
- Tony Giles, General Manager, California Joint Powers Risk Management Authority (CJPRMA)
Different types of organizations configure risk management differently. Why does it matter? It is about access to resources and decision makers, the risk manager’s level of authority and the overall culture of the organization. Each department looks at issues differently and has different priorities.
Human Resources focuses on the workforce. Because they pay attention to adherence to rules and processes, they can be great allies to risk management.
- Workers’ compensation is often in HR. Having that direct access can be very important for the risk manager.
- Provides closer integrations with disability and retirement issues.
- Offers closer integration with disciplinary issues.
- Offers a potential synergy with the benefits function (global insurance program).
- Provides a natural connection to the entire organization.
- Discipline flows out of HR, which can cause difficulties with trust in workers’ compensation.
- Colleagues and managers do not always understand risk management.
- Litigation efforts can be bifurcated with the legal department.
- Labor issues can create conflict with risk management goals.
The Finance Department typically focuses on the bottom line. They have a deep understanding of the financial impacts of the organization’s decisions. They can be a great match for risk managers because they are the defender of the agency’s assets.
- The department has a closer nexus to the budgeting process.
- Actuarial report development access.
- Responsible for reserve funds portfolio/asset management.
- Property inventory and appraisal responsibility.
Fleet inventory control resides in Finance (purchase, sale, piggyback
- Checks and balances with other department loss expenditures.
- Trust fund bank reconciliations.
- Greater control of the restitution process.
- Greater focus on public financing instruments, like bond, COPs, TRANS.
- Service delivery is typically in other areas, like workers’ compensation, benefits, litigation management, safety and loss control.
- Finance director can present claims in a closed session versus the risk manager.
- Special compliant training may not be emphasized.
The Legal Office is focused on legality and compliance. They are typically fine with creativity as long as you are following the law.
- You get access to legal relationships for leverage (like attorney/client privilege and small claims court)
- There are minimal budget responsibilities. This is not their area of concern.
- Politics – you can be closer to the action. The chain of command is compressed and that gives clarity.
- Efficient department direction.
- Easier access to the C-Suite and Board.
- Turf wars can occur.
- There is an overall lack of risk management understanding.
- The risk management process can be subservient to counsel. You might not get much support.
- Programs can be more difficult to complete.
The Chief Executive’s Office is always looking at the big picture and the overall good of the organization. They are in a good position to weigh the risk of loss versus the potential for gain.
- Direct access to the C-suite and Board. Find a champion and it becomes easy to green light projects.
- Typically receive access to larger budgets.
- Easy enterprise risk management connections.
- The department provides direction to other departments.
- C-Suite communications are different. You are often public facing.
- Politics can come into play and your policies turn into negotiations.
- Increased scrutiny.
- Increase interaction with the press and unions.
- Can become a catch all for projects.