Risk Management Policy

By definition, risk management is:

“the identification, analysis and economic control of those risks which can impact on the Council's ability to deliver its priorities and objectives”

Policy objective

The objective of this policy is to safeguard the government's property, interests, and certain interests of employees during the conduct of government operations.

Policy statement

It is government policy to identify, and reduce or eliminate risks to its property, interests and employees, to minimize and contain the costs and consequences in the event of harmful or damaging incidents arising from those risks, and to provide for adequate and timely compensation, restoration and recovery.

Application

This policy applies to:

- departments and departmental corporations named in Schedules I and II of the Financial Administration Act; any division or branch of the Public Service of Canada, including commissions appointed under the Inquiries Act, designated by the Governor in Council as a department; and the Canadian Forces; referred to in this policy as "departments"; and

- every individual appointed or employed as a servant of Her Majesty in Right of Canada (the Crown). Without limiting the generality of this application, "servant" includes any individual appointed or employed by any of the entities referred to above; any minister, agent, and former servant of the Crown; and the estate of a deceased servant of the Crown. It does not include any person appointed or employed by or under the authority of an ordinance of the Yukon Territory or the Northwest Territories, or any person engaged under a contract for services.

Policy requirements

Identification

1. Departments must identify the potential perils, factors and types of risk to which their assets, program activities and interests are exposed.

Minimization

2. Departments must analyze and assess the risks identified, and design and implement cost-effective risk prevention, reduction or avoidance control measures.

3. Departments must:

(a) select underwriting options;

(b) self-underwrite the risks to which the government alone is exposed and over which it generally has control, and provide for and absorb, through their annual appropriations, any cost that may arise from self-underwriting;

(c) ensure that contractors do not procure insurance on risks that are clearly the responsibility of the government, and that contractors are not indemnified by the government against the risks to which only the contractors are exposed.

4. Departments must plan and budget for containment, compensation, restoration and disaster recovery.

Containment

5. Departments must activate emergency organizations, systems, and contingency plans, and initiate recovery measures.

Compensation, restoration and recovery

6. Departments must:

(a) investigate incidents to determine their causes;

(b) assess the extent and value of damages and determine potential legal liability; and

(c) make incident reports.

7. Departments must settle and pay claims by or against the Crown and against its servants in an adequate and timely manner, and generally refer cases involving legal proceedings, and claims associated with a contract, to the Department of Justice.

8. Departments must repair or replace damaged assets and operating systems to return operations to normal as soon as possible.

9. Departments must:

(a) report each fiscal year in the Public Accounts: all payments of claims against the Crown; all ex gratia payments; court awards; and all losses of $1,000 or more including accidental destruction of, damage to, or theft of, assets that would normally be covered by insurance had insurance existed;

(b) report to the appropriate law enforcement agencies losses over $1,000 which are due to suspected illegal activity; and

(c) maintain their own data-base as part of the feedback system of management information.

10. Departments must establish new or improved measures to prevent the recurrence of incidents, and to recover from disasters.

Responsibilities

The Department of Justice provides legal advice, opinions, arbitration and negotiation services and is responsible for all litigation concerning claims by or against the Crown and against its servants.

Labour Canada and the Office of the Fire Commissioner of Canada are responsible for the provision of fire protection services, maintenance of fire loss records and, when required, the preparation of reports on fire losses in the government.

Monitoring

The Treasury Board Secretariat will review the effectiveness of this policy in assisting departments to manage the risks to which they are exposed. The impact of the policy on departmental operations and performance will be gauged by how well the department has: identified and minimized its risks; contained the effects of any damaging or harmful incident; and achieved adequate and timely compensation, restoration and recovery.

Feedback on the implementation and the effectiveness of the policy will be obtained from departmental monitoring information, internal audits, reviews and information available from other reports and government organizations.