In the midst of tumultuous times, the City of Calgary is increasing its risk tolerance.
“Responding to risk in uncertain times has necessitated our organization to seek new and effective and innovative approaches,” city manager David Duckworth told the city’s audit committee Thursday.
Increased risk levels resulted from the confluence of the coronavirus pandemic and the economic shock of the ongoing economic downturn that started with the drop in oil prices in 2015.
“These risk events and impacts will continue to be felt throughout 2021 and beyond,” Duckworth said.
The city’s chief administrative officer identified two broad areas of risk immediately facing the city’s operations.
“The first is that the organization may be required to reduce service levels due to external and internal pressures,” Duckworth said.
“And the second area of risk is whether the organization will be able to meet citizen expectations as to what the city can do to contribute to Calgary’s economic recovery, as some of those expectations will require tools and levers that are broader than the City of Calgary currently has at its disposal.”
Ward 8 Coun. Evan Woolley, who chairs the committee that received the report, said the review gives context to what risks the city is facing.
“It is a great opportunity for council to give feedback on the actions that we’re taking to mitigate risks and receive insight into what the corporation is thinking about,” Woolley said Thursday.
City council will receive the full report at an upcoming meeting.
Reputational, economic, financial, social impact and health, safety and wellness were the top five of 17 identified principal risks to the City of Calgary as a corporation. Social impact risk, the increased social unrest stemming from changed social and economic conditions, jumped into the top five since the last risk report the committee received.
The city also faces a squeeze in finances, with the provincial government delaying or cutting capital funds, non-residential property values necessitating a tax shift, and a budget that has not kept pace with inflation.
“We’ve been on track to be as cost effective and efficient as possible,” Duckworth said. “And through that, we’ve unfortunately had to endure some service cuts, budget cuts and the ‘low-hanging fruit’ is really gone.”
Duckworth also highlighted how the pandemic and restrictions that came in to mitigate the second wave caused “harm to a weakened economy.”
“Recovery is expected at unequal rates, with some industries responding quicker than others.
“Shifts to remote working and lack of business travel and tourism negatively affects the attractiveness of our downtown.”
The city plans to lean on its economic resilience and financial task forces, and the existing business-friendly and “rethink to strive” strategies to help with a post-pandemic recovery.
Duckworth said the city’s integrated risk management team used “critical uncertainties” — like the change in commuter habits, downtown vacancies, social unrest and protests — during the spring of 2020 to “foster a new way of thinking” within city administration.
“Identifying and discussing critical uncertainties as part of the strategic foresight process, which seeks to build plausible futures, test assumptions and ultimately reduce the chance of being caught by surprise,” Duckworth told the committee.
Woolley said risk should be understood and mitigated instead of avoided, pointing to large projects like the Green Line.
“There are risks associated with those,” the Ward 8 councillor said. “But we do that as citizens and as corporations because of the benefits.
“And so us being intentional about taking risks and having a good understanding is something that we do an increasingly good job of at the city.”
Duckworth said Calgary, its citizens and businesses have changed, and city administration is shifting how it views risk.
“We can no longer afford to avoid risks,” Duckworth said.
“We need to look for ways to embrace opportunity and take some risk in order to support innovation.”