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By DAN REYNOLDS, senior editor

Spurred in part by the $35 million that the city paid out in liability claims in 2006, Los Angeles Controller Laura Chick, has issued a report calling for the implementation of enterprise risk management across the city's 40 departments and agencies.

"From the top down, the city does not have a clearly defined and communicated strategy in proactively preventing losses before they occur," wrote Chick, in a January letter directed at Los Angeles' mayor and members of the City Council.

The report includes these prickly observations.

--The city does not have defined risk management governance processes to provide guidance for the proactive and consistent identification, assessment and management of risk.

--Risk management is focused on risks that "appear" to be high risk, without the benefit of a structured risk assessment process.

--Current risk monitoring and reporting is limited.

--Since most risks are not formally assessed or monitored, limited information is available for decision making and resources are rarely allocated based on consideration of risk.

Drawing on an analysis of enterprise risk management programs enacted by municipal and regional governments in Canada, South Africa, Great Britain and Australia, Chick's office recommends the formation of an (ERM) steering committee that would include the mayor, herself, the city's chief administrative officer, its chief legislative analyst and the city attorney.

In a response to Chick's report, then Chief Administrative Officer Karen Sisson wrote that while she agreed that there is a need for a citywide ERM program, funding the infrastructure for ERM is another matter, making an implementation date 'indeterminable at this time.' "

December 1, 2008

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