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Step 4: Link Programs, Initiatives, and Risks

The next list required was that of the existing programs currently in place to fulfill the strategic objectives. For the ease of the workshop, it was decided to use

Relationship between Risks and Strategic Objectives

Exhibit 15.5 Relationship between Risks and Strategic Objectives

Source: Adapted from pm2 Consulting Risk Scorecard model, 2012.

the list of programs shown in the annual operating budget. Other program levels could have been used, such as that used in the city's results-based budgeting (RBB) initiative. This initiative divided budget-level programs into smaller components, which would be easier to change but increased the number of programs tenfold. It was for this reason the RBB-level program list was rejected; the number of programs in that initiative was exceedingly high.

Once a program level was agreed on, a new table was created, with the programs across the top and the strategic objectives down the left side. On this table, the subject matter experts scored the impact of the relationship between each program and each strategic objective (on a 1 to 5 scale). In addition, the participants estimated the effectiveness of each program (i.e., whether it fulfilled the requirements of the program), again on a 1 to 5 scale, with 5 meaning the program was performing as required and 1 meaning the program's performance was well below what was required. The difference between what was required of the program and its actual performance (i.e., 5 minus the effectiveness score) was known as the strategic gap. An excerpt from this table can be found in Exhibit 15.6.

Linkages between Strategy and Programs

Exhibit 15.6 Linkages between Strategy and Programs

Source: Adapted from pm2 Consulting Risk Scorecard model, 2012.

At this point a new graph could be created, with a vertical bar for each strategic objective and its cumulative program requirements. Adding the cumulative effectiveness and cumulative strategic gap gave a stacked bar graph whose height was its cumulative program requirement. The bigger the objective, the more programs it had and therefore the higher cumulative program requirements (and likely a proportionally large strategic gap).

The last dimension in step 4 was to list new initiatives the City planned to implement, and rate their importance to each strategic objective. For the purposes of the workshop, it was decided to limit the list to those in the Implementation Plan for each Ways document. Within this set of possibilities, only the initiatives coded as "will do" (not "already done," "already doing," "could do," or "aspire to

Linkages between Strategy and Initiatives

Exhibit 15.7 Linkages between Strategy and Initiatives

Source: Adapted from pm2 Consulting Risk Scorecard model, 2012.

do") were used for the initiatives list, to keep it to a manageable size. With this list scored by each strategic objective on a 1 to 5 scale, a graph could be produced showing the cumulative impact of future initiatives on each strategic objective. A table linking initiatives to strategy is found in Exhibit 15.7.

With the strategic gap and initiatives impact established, the two graphs for each objective could be combined on one graph to show the cumulative strategic gap and cumulative initiative impact for each strategic objective. If resources were properly allocated, one would expect to see a correlation between the height of the strategic gap bar and the height of the cumulative initiative impact point for each objective. For viewing purposes, it was necessary to use different scales for each data series, to best show the correlation. Finally, the risk weighting for each strategic objective could be added to the graph. This showed the relative risks associated with each strategic objective in relation to its required programs and initiatives.

Strategic Objectives – Risk, Strategic Gap, and Impact of Initiatives

Exhibit 15.8 Strategic Objectives – Risk, Strategic Gap, and Impact of Initiatives

Source: Adapted from pm2 Consulting Risk Scorecard model, 2012.

Overall, a correlation between risk, strategic gap, and initiatives may be observed. For objectives whose risks do not correlate with strategic gap and initiatives, this forms the basis of discussion for the objective; in-depth analysis shows the types of risks, whether they are caused by or independent of the programs comprising the strategic gap, and whether future initiatives address the risks, either directly or indirectly. The graph showing risk, strategic gap, and impact of initiatives on strategic objectives is found in Exhibit 15.8.

Step 5: Determine Indicators and Mitigation Actions

The final step involved completion of a risk indicator worksheet for each risk/ strategic objective combination. This sheet required the user to list potential mitigation strategies, including required lead time, as well as indicators of inputs, actions, or outputs that would signal the potential onset of a risk event. The worksheet data were then summarized in a database indicating strategic objective, risk, mitigation, lead time, and whether the organization is already undertaking the mitigation. The database could then be grouped by objective, risk, or mitigation as needed.

On completion of the mitigation database, the final risk scorecard could be completed. This was a table showing strategic objectives on the left and risks across the top. For each data point, the impact of the risk on that objective was indicated, as was its performance (good, fair, or poor shown as medium gray, light gray, dark gray), and showed the risk level for each objective (the level of potential risk of the risk element impacting this strategic objective).

This provided a basis of discussion to identify key risks affecting strategic objectives.

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