RISK MANAGEMENT

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RISK MANAGEMENT

• Steve Haworth

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Risk management

• Risk management is about making the right
  decisions and about achieving objectives once
  those decisions have been made
• If a Council doesnt have effective risk
  management then it doesnt have effective
  management
• (S.O.L.A.C.E.)

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This session ------

• What is risk management?
• Why bother?
• How we audit risk management
• Lessons from our work so far

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Risk and risk management

• Risk
• The possibility of something happening which
  may have a (detrimental) impact on the
  achievement of an organisations objectives.
• Risk management
• The culture, processes and structures that are
  directed towards effective management of
  potential opportunities and threats to the
  organisation achieving its objectives.

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Risk management effective management

• Not rocket science
• Needs to be embedded in philosophy, business
  plans and practices
• Should not be seen as a separate initiative
• Everybodys business
• 75 of risks cannot be insured against- so, its
  not just about insurable risks ----

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Risk management is a key player
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Risk Management - a systematic approach
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Lest we forget ----
Allerdale
Foot mouth
Hillsborough
Barings
BCCI
Marchioness
Lyme Bay
The Dome
Kings Cross
Piper Alpha
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Risk management in the public sector

• NHS already have to do it
• In Local Government
• guidance from CIPFA/ Audit Commission
• part of Corporate Governance requirements

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Corporate Governance requirements

• Establish and maintain a systematic strategy
  framework for identifying, controlling and
  managing risks
• Make public statements to stakeholders on the
  risk management strategy and framework
• Ensure continuous monitoring and effectiveness of
  compliance with risk management strategy

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The benefits of good risk management

• Get it right first time
• Helps deliver Best Value effective Corporate
  Governance
• Identifies what needs to be done (not done) to
  achieve objectives
• Better outcomes
• Reduces risk related costs
• Protects reputation

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Risk management and Best Value

• Functions with similar objectives
• based on principles of improving outcomes
• requires incorporation into all areas of business
• everyone is involved
• Best Value reviews
• stand alone reviews of risk management
• incorporation of principles into reviews

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Our approach

• Review of risk management arrangements
• Interviews
• Documents
• ALARM survey
• Facilitated workshops
• risk identification
• awareness raising integration

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Survey headlines

• Risk Management embedded at only 1/3 of
  authorities
• 75 of members unaware of risk implications of
  decisions made
• Half of authorities have a strategy
• Claims hot spots
• highways
• work related stress

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Issues from our reviews

• Scope for more
• Explicit systematic approach
• consistency
• co-ordination
• strategic focus

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Risk management - success factors

• Management team commitment and leadership
• High level group to co-ordinate RM activities
  agree corporate risk profile
• Involve the right people within existing
  management processes
• Follow consistent approach to risk management
  cycle
• Emphasise that risk taking is as important as
  risk avoidance

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In summary ----

• Risk management is everyone's responsibility