Integrating performance & risk management

1. Integrating performance & risk management Michelle Pagán ERM Program Manager Teacher Retirement System of Texas IMPACT 2016

2. Topics • Overview of Strategic Planning • Overview of Enterprise Risk Management • Integrating ERM & Strategic Planning • Utilizing LogicManager for Tracking/Monitoring

3. TRs of texas • Trust fund value $133+ billion • Health Care • 1.4 million members • 378,000 retirees/beneficiaries • 9 member Board • 630 employees

4. TRS’ VISION & MISSION TRS Vision Earning your trust every day. TRS Mission Improving the retirement security of Texas educators by prudently investing and managing trust assets and delivering benefits that make a positive difference in members’ lives.

5. STRATEGIC PLANNING • A strategic plan answers two fundamental questions: where are we going, and how do we get there? It pinpoints where we want to be and directs us there. • The TRS strategic plan maps out the path for fulfilling our mission and moving further toward our vision every day. The clearly defined goals, objectives, strategies, and tactics (GOST) ensure that we successfully execute the plan. • The Board of Trustees approves the mission statement and provides direction with TRS goals.

6. gost EXAMPLE • Goal = General statement of desired outcome. • Objective = Specific statement of desired outcome. • Strategy = General statement of HOW the goal will be achieved. • Tactic = Specific statement of HOW goal will be achieved.

7. TRS GOST EXAMPLE (WHAT) • Goal - General statement of what we want to achieve TRS Goal - Attract, retain and develop highly competent staff. • Objective - Specific statement of what we want to achieve TRS Objective - Develop and maintain a desirable work environment.

8. TRS GOST EXAMPLE (HOW) • Strategy - General statement of how to achieve the goal TRS Strategy - Promote a strong workplace culture that exemplifies TRS core values and emphasizes TRS’ mission. • Tactic - Specific statement of how to achieve the goal TRS Tactic - Communicate and promote core values through the quarterly recognition program and annual Golden Apple Awards.

9. WHAT IS ERM? Coordinated activities to direct and control an organization with regard to risk. Source: ISO 31000 Simply put: A process to help ensure that you meet your objectives. (the link to strategic planning)

10. TRS ERM STRUCTURE

11. trS ERM PROCESS • Goals/Objectives • Risks (Indicators) • Mitigations • Assess Risk (Impact, Likelihood, Assurance, Velocity) • Risk Owner • Management Response • Action Items (Issues) • Monitoring • Reporting Process

12. the vision • LogicManager Tool: • Risks • Performance

13. why does it matter? • Ensure the risks identified and mitigated are aligned with the strategic plan goals; and • Ensure planned mitigations are implemented, tracked, and budgeted.

14. strategic planning, erm & budget integration • How can we integrate strategic planning, ERM, and budget to better accomplish our mission? • Map stoplight report to the strategic plan • Carry risks through to strategic planning sessions • Quarterly budget meetings include a specific discussion of strategic plan and risk mitigation needs • Initial and supplemental budget requests and IT resource needs must tie to the strategic plan or risk mitigation

15. Illustration of ERM in Action Through the Strategic Plan TRS Strategic Plan Excerpt Goal 4:  Attract, retain and develop a highly competent staff. Objective 1: Develop and maintain a desirable work environment. Objective 2: Develop an effective recruitment/retention strategy and a competitive total rewards package.

16. TRS STOPLIGHT REPORT – November 2016

17. TALENT CONTINUITY RISK REPORT

18. TALENT CONTINUITY RISKS in logic manager

19. TALENT CONTINUITY RISKS in logic manager

20. Talent Continuity – objective/Strategy/Tactic • Objective • Develop and maintain a desirable work environment. • Strategy • Promote a strong workplace culture that exemplifies TRS core values and emphasizes TRS’ mission. • Tactic • Communicate and promote core values through the quarterly recognition program and annual Golden Apple Awards.

21. Strategic Plan Performance Methodology

22. Strategic Plan Performance Methodology

23. Strategic Plan Performance Assessment process Tactic Owner/Subject Matter Experts: Post-Assessment (Follow-up Review) Positive impact? Appropriate impact level? Timing too aggressive or just right? Achievement? • Pre-Assessment (First Review) • Assess Performance • Performance Heat Map • Performance Score • Monitoring

24. strategic plan tactics REPORTING in LogicManager

25. performance library (tactics) in logicmanager

26. talent continuity tactics in logicmanager

27. LogicManager Tracking/Monitoring Future Planning Decision-making Emerging risk identification Budgeting • Tracking/Monitoring • Tactic Ownership/Accountability • Mitigation/Issues identification • Automated reminders/updates • Reporting Process • LogicManager reports • Risk Oversight Committee • Risk Management Committee

28. ISSUES REPORTING IN LOGICMANAGER

29. Questions Michelle Pagán ERM Program Manager Teacher Retirement System of Texas michelle.pagan@trs.texas.gov 512-542-6621