Enterprise Risk Management
As the most successful model of Public-Private Partnership (PPP) in the Philippines, Manila Water continues to grow and improve as a leader in the provision of water, used water and environmental services in the country. Risk management is a key contributor to this success. At all levels of the organization, risk management is consistently used as a tool for effective decision-making, planning and operations, resulting in a resilient and agile organization that is able to thrive amidst difficulties in its regulatory and physical environment.
Enterprise Risk Management in Manila Water
Manila Water operates in a regulated and dynamic business where uncertainties, both detrimental and opportune to the Company, abound. The Company is accountable to its regulators, shareholders, employees and customers, among others, even as profitability, sustainable development and corporate social responsibility are expected to be continuously enhanced. In order to achieve its corporate objectives, Manila Water recognized the need for the active management of risks inherent in its business which involves the entire organization.
Manila Water continues to implement its Enterprise Risk Management (ERM) Program based on a globally-accepted approach, the ISO 31000:2009. The program helps Manila Water and its subsidiaries monitor and manage the strategic, regulatory, operational and financial risks. It is a proactive process that is well linked to corporate goals and objectives, embedded in the corporate culture and is well integrated into critical and strategic planning and operational processes of the company. The ERM Program has been cascaded to all the departments in Manila Water. The same has been implemented in its subsidiaries in Boracay, Cebu, Clark and Laguna and its affiliates in Vietnam to ensure the attainment of their respective growth objectives. The implementation of the ERM Program to the subsidiaries and affiliates considers the unique business and risk environment where these subsidiaries operate.
The ERM Program operationalizes the Company’s Manual of Corporate Governance which mandates the Board of Directors (BOD) to ensure the presence of organizational and procedural controls supported by an effective management information system and risk management reporting system. In addition, the Company’s Risk Committee, as stated in the Risk Committee Charter, is required to provide oversight to management functions relating to strategic, financial, operational, compliance, legal and other risks of the Company which involves periodic disclosure of significant risk exposures and related risk management activities.
The President is the comprehensive risk executive and is ultimately responsible for ERM priorities, strategies, tolerances and policies. He chairs the Risk Management Executive Committee (RMEC) which is composed of top management and the Chief Risk Officer (CRO). The RMEC provides oversight and input to the President and to the Board to enable them to formulate better and informed decisions on matters relating to risks. The RMEC provides direction on the design and implementation of appropriate systems, tools and methodologies to support the ERM process and other risk management activities, and designates owners of specific risks and enablers of the ERM process (ERM Champions).
The CRO is the ultimate champion of ERM at Manila Water. Supporting the CRO is the Enterprise Risk and Insurance Management (ERIM) Department. It is responsible for developing risk management tools, methodologies and processes, and leads the implementation and dissemination of ERM across Manila Water in coordination with the risk owners or the CRO and ERM Champions of the business units.
2016 ERM Activities
For 2016, the following activities were carried out to improve the Risk Management System of Manila Water:
Risk Culture Survey. ERIM Department conducted a risk culture survey across the Manila Water enterprise to determine the state of Manila Water’s risk culture. The survey identified weaknesses in the risk culture of the organization and action items to address such gaps were incorporated in ERIM Department’s 2017 plans.
ERM Week. Manila Water held its first ever ERM Week with the theme “Delivering Value through Risk Management” where various activities were prepared aimed to increase awareness on ERM and its significance in the organization. Some of these were: the “GalleRisk,” an exhibit showcasing the past winners of the Gawad Iwas-Lunas: Risk Management Excellence Awards; the “ERM Lure Party—Hit them All” learning session to introduce new risk management tips to employees; the “RiskQuiz” where employees are given the chance to win a prize by answering the one-day hourly online quiz about general ERM information; and the “Risk Intelligent Ones” e-mail communications where appointed ERM Champions / Partners / Risk Officers from different departments, groups and subsidiaries share how they champion risk management in Manila Water.
- Black Swan Workshop in the Subsidiaries. To improve the risk sensing capability of its subsidiaries in Boracay, Cebu and Laguna, Manila Water conducted black swan workshops for the Leadership Team and Expanded Leadership Team of the said subsidiaries. The exercise enabled the management to challenge business assumptions and identify the black swans of each organization. The results of the exercise were used to validate the top risks identified earlier during the year.
- Enhancement of Risk Management Excellence Awards Program. Manila Water enhanced its risk management excellence awards program to engage more stakeholders. A new category, Risk
- Advocate of the Year, was introduced for 2016 as well.
- Quality Management System for Insurance Management. A Quality Management System based on ISO 9001:2015 (risk-based approach to quality management system) was established for Insurance Management. ERIM Department passed the certification audit without nonconformities. The adoption resulted to improved system documentation and ensures consistent compliance to stakeholder requirements.
- Insurance Roadshow for Projects. Manila Water conducted insurance roadshows which highlighted the risk management activities for specific projects. The roadshows resulted in improved insurance coverage, lower premium rates and greater risk awareness of insurance panels.
Manila Water bagged two of the four awards during the Ayala Risk Awards 2016. These were the ‘Delivering Value through Risk Management Award (for the East Zone Earthquake Impact Risk Reduction Study) and the Risk Management Professional of the Year which was awarded to Ma. Victoria P. Sugapong. The awards are testaments that ERM is alive in Manila Water.
As Manila Water sets its sights on further expanding its reach and footprint, it continues to engage its talents in finding more cost-effective and innovative ways to manage risk. With sustained active involvement and appreciation of risk management at all levels within the organization, the Company is geared up to manage uncertainties in the regulatory, business and physical environment, and is equipped to achieve and seize new business goals as well as continue its very crucial role in protecting the environment and enhancing sustainable development both locally and internationally.
Management of Top Corporate Risks
The RMEC, composed of Manila Water’s Senior Leadership Team, Manila Water Operations Management Committee and the Chief Risk Officer, determines the most significant risks facing the Company. Management of Top Corporate Risks, which have been mapped up to the department level, was delegated to the appropriate Risk Owners.
Risk Owners formulate and commit to a risk management plan, monitored by the ERIM Department, which defines specific action points, accountability and timeline. The status of the Top Corporate Risks is regularly discussed at the RMEC and is reported to the Risk Committee.