AGENDA ITEM 9.2

      STAFFORDSHIRE MOORLANDS DISTRICT COUNCIL

                            Report to Cabinet

          ...
2.2   The Risk Management Strategy was updated in October 2005 to
      strengthen the content in the light of issues iden...
2.7   The Risk Management Group further considered the Performance
      Management approach to be adopted with regard to ...
ANDREW P STOKES
                                Corporate Director




Background Papers              Location            ...
5     Introduction and Background

5.1   The profile of risk management has been elevated in recent years by
      the imp...
7      Corporate Risk Register Update

7.1 The Service risk catalogues were updated in September in conjunction
    with S...
7.4 The updated Risk Map for the Council, derived from the new Register, is
    as follows:


Updated Risk Map for the Cou...
7.5 The updated Register contains 126 High risks. These are detailed in
    Appendix B and are categorised as follows:


 ...
Additions to Corporate Risk Register since February 05 Report

Risk Ref.      Service                 Risk                ...
Risk Ref.      Service                   Risk                      Action Required

HBA7         Housing        Risk of su...
“The weakest aspect of (risk management) development where
             most remains to be achieved…”

      Given this pe...
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Appendices enclosed: Appendix A – Risk Management Policy and

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Appendices enclosed: Appendix A – Risk Management Policy and

  1. 1. AGENDA ITEM 9.2 STAFFORDSHIRE MOORLANDS DISTRICT COUNCIL Report to Cabinet 13th December 2005 TITLE: Risk Management Update PORTFOLIO: Resources OFFICER: Corporate Director WARD: Non-Specific Appendices enclosed: Appendix A – Risk Management Policy and Statement 2005 Appendix B - Risk Thresholds Appendix C and D- High Risks brought below Corporate Threshold since Feb. 2005 1 Recommendations 1.1 That the revised Risk Management Strategy be approved 1.2 That the amendments to the Corporate Risk Register are noted 1.3 That the approach to partnership risk be noted 1.4 That the risk management performance monitoring process be approved. Reason for Recommendations: - To ensure compliance with the Council’s Risk Management Strategy and to assist in informing the setting of the budget in line with the overall priorities of the Council. 2 Executive Summary 2.1 This report builds on the Authority’s risk management approach and covers four key elements: • The revision of the Risk Management Strategy • The update of the Corporate Risk Register • The approach to partnership risk • The performance monitoring of risk management action.
  2. 2. 2.2 The Risk Management Strategy was updated in October 2005 to strengthen the content in the light of issues identified in: • The Audit Commission’s Use of Resources key lines of enquiry • The 2004/05 Statement of Accounts (Statement of Internal Control). The changes were agreed in consultation with members of the Risk Management Group. 2.3 The Corporate Risk Register was updated in September 2005 to feed into the 2006/07 Budget-setting process. The outcome of this exercise was incorporated into the Budget Strategy reported to Cabinet in October 2005. This report is the final stage (i.e. presenting the Register for approval by Cabinet) and highlights the following: • And updated risk map • The highest rated risks in terms of severity and probability • Key changes to the risk profile since the last report • Added risks, deleted risks, and high risks brought below the Authority’s risk threshold since the last report; and the • High risks element of the Corporate Risk Register. 2.4 The updated Risk Register shows a reduction in the overall number of risks from 365 to 326. The 220 High Risks reported in February 2005 have reduced to 126. This reduction is partly due to action taken and service-reassessment of the status of risks within the Register. The significant reduction in the number of high risks is typical of the maturing phase in Risk Register development (i.e. the rate at which new risks are added is outstripped by the rate at which existing risks are addressed, leading to a net fall in the number of high risks). 2.5 Other Risk Register developments since the last report include: • The categorisation of all risks as either Operational, Strategic or Project risks; and • The flagging of all risks involving partnerships. 2.6 The Risk Management Group considered the approach the Authority should take in managing the risk associated with the partnerships that the Authority is involved in. The adopted approach comprises three parts: • The identification of all partnership activity • The determination of the associated risks; and • The mapping of risks to internal control systems.
  3. 3. 2.7 The Risk Management Group further considered the Performance Management approach to be adopted with regard to Risk Management. It is proposed that: • Responsibility for monitoring the management of ‘operational’ high- risk actions should reside with the appropriate service manager • ‘Strategic’ and ‘project’ high-risk actions should be incorporated into the existing performance management reporting process and monitored by report to Councillors. 3 Evaluation of Options 3.1 There are no options to consider with this report. The revision of the Risk Management Strategy and the update of the Corporate Risk Register form part of the Council’s approach to minimising the impact of risk on service delivery. 4 Implications 4.1 Community Safety None 4.2 Equalities This report has been prepared in compliance with the Council’s equal opportunities policy. 4.3 Employees None 4.4 Financial A number of high-risk areas have budgetary implications. In particular housing benefits (Ref. FS2), interest rates and the impact on investment income (Ref. FS3), and rising pension costs (Ref. CF4). These issues are addressed by ensuring the Council retains sufficient reserves. The cost of direct action to mitigate risks is included in the 2006/07 revenue and capital budget reports. 4.5 Legal: None 4.6 Sustainability: None
  4. 4. ANDREW P STOKES Corporate Director Background Papers Location Contact Full Corporate Risk Register Finance and Revenues, Chris Hartgrove Moorlands House Head of Finance & Revenues Tel: (01538) 483554 Decision: Reason: Interests Declared:
  5. 5. 5 Introduction and Background 5.1 The profile of risk management has been elevated in recent years by the importance placed upon it by the Comprehensive Performance Assessment (CPA). This emphasis has been further reinforced by the demands and requirements of the: • Civil Contingencies Act • Corporate Governance agenda • Audit Commission ‘Use of Resources’ key lines of enquiry, and the • Annual Statement of Internal Control. 5.2 This report builds on the Authority’s risk management approach and addresses issues raised in the above documents. The four key elements covered by this report are: • The revision of the Risk Management Strategy • The update of the Corporate Risk register • The approach to partnership risk • The performance monitoring of risk management action. 6 The Revision of the Risk Management Strategy 6.1 The Risk Management Strategy has been revised in consultation with the Risk Management Group. 6.2 The main changes incorporated into the Strategy are as follows: • The importance of key external drivers (CPA, Civil Contingencies Act etc) is acknowledged • The Communication aspect of the Strategy is strengthened • The role of the Corporate Risk Register as the primary tool for delivering effective risk management is emphasised • The member role on the Risk Management Group has been revised • The funding arrangements for risk management initiatives have been revised • An appendix detailing the risk mapping and risk rating approach has been added. 6.3 The updated Risk Management Strategy is attached as Appendix A to this report.
  6. 6. 7 Corporate Risk Register Update 7.1 The Service risk catalogues were updated in September in conjunction with Service Managers and Heads of Service. This update was timed to feed into the 2006/07 budget setting process. 7.2 Financial issues emerging from the exercise were considered by the Risk Management Group and fed into the 2006/07 budget growth process for consideration. 7.3 The profile of the updated Risk Register is as follows: Corporate Risk Register - Risk Profile 400 350 300 250 no risks 200 Feb-05 150 Oct-05 100 50 0 High Medium Low All Risk Status A review of the risks identified in the Risk Register reveals that: • 326 risks have been identified compared to 365 in the last Register • 39% (126) of risks identified are considered ‘high’, compared to 60% (220) previously • 49% (162) of risks identified are considered ‘medium’, compared to 28% (104) previously • 12% (38) of risks identified are considered ‘low’, compared to 12% (41) previously.
  7. 7. 7.4 The updated Risk Map for the Council, derived from the new Register, is as follows: Updated Risk Map for the Council Previous number in brackets A 1 (3) 2 (2) 2 (5) 9 (9) B 3 (3) 11 (14) 18 (29) 8 (19) C 7 (5) 26 (14) 22 (44) 24 (33) D 5 (6) 15 (17) 62 (31) 18 (31) E 6 (8) 19 (19) 36 (25) 11 (28) F 1 (1) 2 (2) 5 (6) 13 (10) Prob- IV III II I Ability Severity Key Bold line = Corporate Acceptable Risk threshold Vertical line = high risk Clear = medium risk Shaded = low risk ()= No of risks per previous register
  8. 8. 7.5 The updated Register contains 126 High risks. These are detailed in Appendix B and are categorised as follows: Corporate Risk Register Dec 05 - Risk Categories Project 12 risk category Strategic 35 Operational 79 0 20 40 no risks 60 80 100 7.6 In the period since the Risk Register was last reported to Cabinet, in February 2005, 51 high risks have been brought below the Authority’s acceptable risk threshold (see Paragraph 7.4 above). This has been achieved by a combination of action planning and risk realignment. Appendix C shows the former high risks, which now sit below the threshold, together with the actions taken to bring this about. The relatively high number of risks mitigated in the period is a reflection of the maturing phase of the risk register development. In this stage the rate at which new risks are added is outstripped by the rate at which existing risks are addressed, leading to a net fall in the number of high risks. 7.7 A number of risks (28) have been removed entirely from the Register since the last report. These fall into 2 categories: • Risks, such as staff recruitment and retention and political change, which were repeated in a number of service risk catalogues. These are included within the overarching corporate risk catalogue • Risks relating to events or factors which have passed. These are detailed in Appendix D. 7.8 A number of high risks have been added to the Register since the last report. These are shown in the following table:
  9. 9. Additions to Corporate Risk Register since February 05 Report Risk Ref. Service Risk Action LPC3 Leisure Risk to employee / public safety Set up inspection system, Services within closed churchyards assess maintenance needs (Parks) and plan remedial action. PS19 Property Risk of failure to put together a Develop workable scheme Services suitable scheme to expand within budget. (Markets) market service into Cheadle. CP31 Property Risk of obsoletion of cctv Plan programme to update Services network through technological network from analogue to (CCTV) advances digital technology. FS15 Financial Risk of loss arising from payroll Finalise payroll contract draft Services partnership arrangement with agreement and build on close SCC working relationship with County payroll services. LT5 Local Postal strike (or lost post) at Maintain delivery contingency Taxation billing time causing income plans. disruption LT6 Local Risk to achieving collection rate DD take up campaign, Taxation PI improved recovery action, collective action with Customer Services. CrP26 Corporate Risk of inadequacy in staff Lone Review Lone Working policy Working arrangements and revise procedures. 7.9 The ‘Top 9’ risks on the Risk Map (Paragraph 7.4) are highlighted below: High risks
  10. 10. Risk Ref. Service Risk Action Required HBA7 Housing Risk of subsidy claim error Improved data and control Benefits leading to qualified auditor procedures. Action to opinion and serious financial minimise subsidy loss arising consequences out of backlog situations. HBA10 Housing Risk to performance arising from Monitoring of performance Benefits installation of Pericles system and resource planning to prevent deterioration in service delivery. HBA11 Housing Risk of non-recovery of Benefit Mapping and re-engineering Benefits overpayments leading to dip in of overpayment process performance following new system implementation. CP22 Car Park Risk of new Parking Strategy Robust development of Service failing to realise income levels Strategy’s implementation. necessary to meet Council’s no overall cost objective. ICT7 ICT Services Staffs Partnership fails to Endeavour to keep implement CRM solution or partnership on track and on costs increase substantially budget. ICT17 ICT Services Risk of contract procedure rules All projects to be Quality not being followed on large Assured by Corporate contracts. Procurement. ICT21 ICT Services Not meeting ODPM Priority Monthly monitoring and Outcomes and BVPI 157 creation of new ICT Strategy in 2005. ICT22 ICT Services Risk of partners (SeGP / SCC) E – Gov. champions to track. affecting ability to meet ICT21 CST2 Corporate Risk of non-adherence to Review of corporate Strategy Corporate communications approach to information policy leading to poor publicity. dissemination. Action to address these risks is currently ongoing. 8 Approach to Partnership Risk Management 8.1 Partnerships are recognised by the National Audit Office as…
  11. 11. “The weakest aspect of (risk management) development where most remains to be achieved…” Given this perceived weakness, the 2005 CPA process seeks evidence that the risk management system specifically covers partnership working. 8.2 The Risk Management Group has considered the approach necessary within the Authority to manage the risk associated with partnerships and has adopted a three-part process as follows: • Identify all partnership activity within the Authority – This to extend to officer and member representative involvement in outside bodies • Determine the risks carried by the Authority as a result of this partnership activity – by reference to existing risks identified in the Risk Register, supplemented by gap analysis risk coverage • Map identified risks to internal control systems as monitored by Internal Audit. Work is currently on going to put this approach into practice. 8.3 Partnership high risks currently identified are flagged within the Risk Register (Appendix B). 9 Performance Monitoring of Risk Management Action Planning 9.1 The Risk Management Group considered the Performance Management approach to be adopted with regard to Risk Management. It was decided that: • Responsibility for monitoring the management of ‘operational’ high- risk actions should reside with the appropriate manager and be managed at a service level • ‘Strategic’ and ‘project’ high-risk actions should be incorporated into the existing performance management reporting process and monitored by report to Councillors. 9.2 This approach allows for the day-to-day operational risks to be managed by the relevant service manager leaving members to focus on the strategic issues contained within the Risk Register.

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