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CIPSA Presentation - Risk Management

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Transcript of CIPSA Presentation - Risk Management

A New Approach to Supplier Risk
Supplier Risk Management in the ATO

A little about the ATO
International leader in tax administration
Principal revenue collection agency
Facts and figures: 2011-12
$301 billion in net tax collected
$323 million in superannuation guarantee charge collected
Active compliance liabilities raised $11.4 billion
Large scale client contact service management
Workforce of 24,740
Operating expenditure exceeding $3.4 billion
New Commissioner, a shift in thinking...

Resource Allocation
A McKinsey research paper reinforces a risk-based approach, with recent studies revealing a significant amount of misdirected effort

Allocating resources to vendors with the highest risk to outcomes

Contract Management
Quadrants (Critical Risk Factors)

Spend Categories (Category)

ATO Alignment

High

High

Low

Likelihood

Segmentation

 Poor Performance

Contract Manager Assessment

Log of Poor Performance Events

Performance analysis against KPIs

Supplier self-assessment

Assessment / Treatment
Example: Risk Factor - Poor Performance

IT
Property
Business Services
Professional Services
Office Supplies
Travel
Performance
Relationship
Financial
Governance
ATO Large Business Framework
Supplier Segmentation
Corporate Scorecard
Monitoring
Event driven alerts and ongoing monitoring

Treatment
Contractual covenants, undertakings, notifications, preventative and recovery risk mitigation

Assessment
Tiers influence the depth and extent of assessment, performance, financial, governance, etc

Segmentation
Spend category determines criticality and risk factors, reviewed and categorised into one of four tiers

Framework

Segment

Risk Factors

Segment
Tier 1 (226+)
Critical
Tier 2 (151 - 225)
Major
Tier 3 (76-150)
Moderate
Tier 4 (0-75)
Minor
Assessment / Treatment
Example: Risk Factor - Poor Performance

Monitoring

There are more than 33 real-time commercial alerts available in Australia

Monitor
Monitoring

Monitor
Calibrate and refine the segmentation model for each category
Design and deploy appropriate processes, guidelines and materials
Provide adequate segmentation training/support to all stakeholders
Engage vendors in the benefits of the new framework and approach
Communicate performance expectations and progress to suppliers
Drive continuous improvement through supplier review meetings
Co-ordinate supplier management activities across the ATO

Next Steps

$1.1 billion spend per year
75% of spend on 11 contracts
Over 1700 vendors
Includes goods and services relating to:
Property, I.T, call centres, recruitment, printing, travel services, legal services, banking
200-300 staff engaged in some aspect of procurement/contract management
Procure2Pay Solutions
I.T
Governance
People
Outsourcing non-core business
Continual performance improvement:
Internal client feedback
Compliance based assessment
Vendor feedback - Voice of the Supplier survey
Pursuing opportunities to:
Reduce red-tape
Increase consistent practices
Create robust assurance
Generate efficiencies
Manage risks effectively
Questions?
Determined by category
Determined by contract manager
Determined by category
The Overall Score determines the segmentation Tier
Full transcript