RESTRICTED  
  
WT/BFA/W/452  
 
3 September  2018 
(18-3624) Page: 1/3 
Committee on Budget, Finance and Administration    
 
REPORT ON WTO RISK M ANAGEMENT  
1  INTRODUCTION  
1.1.  The WTO Risk Management Policy facilitates effective achievement of strategic and 
operational objectives, by striving to foresee and mitigate risks. A comprehensive risk register was 
developed , and is reviewed and updated periodically, in consultation with different Divisions. The 
previous risk report was submitted to the Senior Management Team in November 2016.  
1.2.  The organizational risk register classifies risks into six major categories. These are: Political 
Risks; Management Risks; Compliance Risks; Occupational Safety and Hazards Risks; Financial 
Risks and Technological Risks.  
1.3.  Risks are assigned a rating reflecting the weight of a particular event given a  probability  
based on the potential damage to the credibi lity, reputation and the capacity of the Organization to 
fulfil its mandate. The rating is the product of the likelihood of occurrence (measured from 1 to 3), 
and impact (measured from 1 to 3), of a scenario.  
1.4.  The descriptions of the risk ratings are as fol lows: low risk (rating of 1 to 2); moderate risk 
(rating of 3 to 4); high risk (rating of 5 to 7); and critical risk (rating of 8 to 9). High and critical 
risks pose a substantial financial risk to the Organization.  
1.5.  As at 31 August 2018, there are 65 ident ified risks. The purpose of this document is to 
present only the critical risks as at this date. The mitigation of critical risks has to be prioritized in 
order to pre -empt adverse impact, were the risks to become a reality.  
 
2  CRITICAL RISKS AS AT  31 AUGUST  2018  
2.1 Table 1 shows the risks that were rated as critical as at 31 August 2018.  
 
Table 1: Risks Rated as Critical  
 Risk Description  Likelihood  Impact  Rating  
Delays/suspensions by key contributors to pay assessed 
contributions to the WTO budget  3.00 3.00 9.00 
Inability to adequately fund the actuarial deficit of the After  
Service Health Insurance (ASHI) Plan  3.00 3.00 9.00 
Delays in Dispute Settlement Appeals  2.67 3.00 8.00 
Members' opting for trade restrictive measures emanating 
from the current trade tensions could raise questions about 
the efficiency and relevance of the Multilateral Trade System    2.67 3.00 8.00 
Loss of critically confidential data, including dispute settlement 
information, due to targeted cyber -attacks or failure of 
security controls  3.00 3.00 9.00 WT/BFA/W/452  
 
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  2.2 Delays/suspensions by key contributors to pay assessed contri butions to the WTO:  There is a 
financial risk of delay or deferment or suspension of contributions by key contributors.  In previous 
years,  this was a moderate risk but in the current context, it is highly probable. There would be 
adverse impact on the WTO budget wh ich would jeopardize the Organization's ability to implement 
its key activities. This risk had a rating of 6 in the previous risk  report.  
Mitigating Actions: Sufficient cash reserves should be maintained in order to address short -term 
cash flow constraints. Prepare 'budget scenarios' and/or 'financial stress tests' and remedial 
actions. Review the Organization's objectives and align  resources with the WTO structure and its 
core activities.  
  
2.3 Inability to adequately fund the actuarial deficit of the After Servi ce Health Insurance (ASHI) 
Plan: The Secretariat developed a long term sustainable approach on ASHI. In October 2017, the 
CBFA approved the establishment of a Special Reserve Account (SRA) to capture and ring -fence 
savings from the WTO Medical Plan budget line in the WTO budget, which may  accrue as a result 
of cost reduction and containment measures. This does not go far enough because the amount 
that can realistically be set aside is unknown and in any event will at best be a small sum of 
money, relative to the ASHI liabilities.  
 
Mitigat ing Actions: As part of the overall proposal on the utilization of accumulated budgetary 
surpluses, and in accordance with the Financial Regulations, a specific suggestion of an amount to 
be directed towards the redress of this issue is being tabled for di scussion by  the CBFA.  
 
2.4 Delay in dispute settlement appeals:  In the last report, this risk was given a rating of 6. The 
likelihood was upgraded from 2 to 2.67. As a result, the overall risk -rating has been revised 
upwards from 6 to 8. In 2017, a total of 3 Appellate Body Members retired: 1 in June, 1 August 
and 1 one in December. No replacements were selected. Therefore, the delay in the dispute 
settlement appeals has become more pronounced. Fu rthermore, as the term of one of the current 
4 Appellate Bod y Members has not been extended in September 2018 , there will be only 3 
Appellate Body Members left. This is the minimum number required per Panel. Were this state of 
affairs to continue through December 2019, the number of Appellate Body Members would fal l 
below the minimum threshold of 3 per Panel required to hear a case. This would have 
reverberating effect on other risks, such as the  perception of declining relevance of the WTO and 
some of its core activities.  
 
Mitigating Actions: As this is an externa l risk, there are limited mitigating actions available to the 
WTO Secretariat. Members need to deliberate more and strive to resolve this.  
 
2.5 Members' opting for  trade restrictive measures emanating from the current trade tensions 
could raise questions about the efficiency and relevance of the Multilateral Trad ing System:  In the 
last year, although trade restrictive measures have not significantly increased, rhetoric among 
some Members has risen and the threat of unilateral actions increased. In light of  recent, and 
potential, developments on trade policy trends, it is clear that there is a much higher and real risk 
of an escalation of trade tensions and the imposition of trade restrictions across the globe that 
may highly impact the WTO’s ability to deli ver on its strategic role.  
 
The likelihood of this risk is 2.67 and the impact is 3.00. As a result, the overall risk -rating is 8.00.  
 
Mitigating Actions: Given that this is an external risk, there are limited mitigating measures 
available to the WTO Secr etariat, apart from the key WTO's trade monitoring role and our 
advocacy in support of the multilateral trading system, including efforts to further improve and 
strengthen it. The trade monitoring exercise has provided Members with an important up -to-date 
check on indicators  in the context of the Global Financial Crisis; and it can also help Members now. 
Senior Management continues to engage Members, emphasizing the merits and values of global 
trade and its regulated systems. Furthermore, the WTO Secretariat continues to clos ely monitor 
trade policy developments and publicly reporting on them.  
2.6 Loss of critically confidential data, including dispute settlement information, due to targeted 
cyber -attacks or failure of security controls : It is the duty of the Secretariat to en sure security of 
information entrusted to the WTO by the Members. Some information assets, e.g. related to 
Dispute Settlement, must remain highly confidential. Threats to confidentiality include state -
sponsored cyber -espionage, which has become a major con cern world -wide, as well as insider 
threat from the Secretariat personnel (employees, interns and consultants).  WT/BFA/W/452  
 
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Mitigating Actions: To mitigate the risk of unauthorised disclosure, the WTO has augmented the 
resources dedicated to Information Security. The  Information Technology Solutions Division (ITSD) 
and Legal Divisions have jointly developed strict control procedures regulating access to electronic 
information. The Confidentiality Classification Policy, as well as associated implementation 
measures, ar e currently under discussion. Extensive monitoring and alerting systems will be 
implemented by the end of the year.  
 
 
 
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