Transcript DERBYSHIRE COUNTY COUNCIL RISK MANAGEMENT AWARENESS …

DERBYSHIRE COUNTY COUNCIL
RISK MANAGEMENT
AWARENESS TOOLKIT FOR ELECTED
MEMBERS
Martin Brassington and Tom Smith
2006
Toolkit objectives
These slides will enable you to understand:
• What is meant by Risk Management
• Understand why it is important
• Understand how it fits into the budget and
business planning processes
• Your role in the process
• How risk registers are developed
• How to contribute fully to the corporate risk
management process
What is Risk Management?
Risk management is the practice of Identifying,
Analysing, and Controlling, in the most
effective manner, all threats to the
achievement of the strategies, objectives
and
operational
activities
of
the
organisation.
Risk Management - why bother? (1)
• To comply with best practice in Corporate Governance
• Key Performance Indicator for DCC in the Comprehensive
Performance Assessment (CPA) process
• It helps us drive the Council Plan by ensuring that risks are
managed effectively
• It encourages innovation and helps us manage change because we
can move forward with confidence knowing that the risks have been
identified, measured and managed
• Good risk management arrangements are integral to sound and
effective financial management
• Well managed risks means we deliver best value
• To make effective and efficient use of resources - Gershon
• To protect the Council’s assets - people and property and ensure
service continuity
• There is an increasing recognition of risks facing Councils.
Risk Management - why bother? (2)
• The visible “Cost of Risk” to Derbyshire CC is in the
region of £6.8m. This includes premiums paid to
insurers, premiums set aside to fund claims internally
and claims costs
• Examples of insurable risks faced by the Council include:
– Fire, Weather, Theft, Motor Accidents.
– Accident/illness to employees.
– Claims by members of the public
• The Health and Safety Executive calculate that the
invisible cost of a claim is 8 to 32 times the cost of
settlement
• The above takes no account of uninsured risks such as
adverse publicity that results in damage to the image
and reputation of the authority.
Categories of Strategic Risk
Examples:
National Agenda v
Local Agenda;
Ring fenced
funding
Example of the Risk Management Process
Source – Association of Loacal Authority Risk managers (ALARM
Risk Management at the Corporate
level
• Identification, Management and Control of
Strategic Risks
• Catastrophe risk financing e.g. insurance or
reserves
• Risk management facilitation – systems and
structures
Risk Management in DCC
THE COUNCIL PLAN: Corporate Aims and Objectives
Risk Management Policy/Strategy approved by Members that sets out
the roles and responsibilities of members and officers and
outlines the way in which the council will manage its risks
Corporate Risk Register that details the significant corporate risks
affecting the authority and includes service specific risks that have
a corporate dimension or impact
Quarterly and full annual reviews reported to Audit
Committee
Reporting
Annual review also taken to Cabinet and Full Council
Details of major risks taken into account by Members when
formulating the budget
Departmental Risk Registers detail the risks specific to a department,
function or service
Details are incorporated into the Service/Business Plans
Funding for major risks is included in the budget bids
Project Risk Registers for major projects e.g. Waste Management; BSF,
MEGZ
Example risk register – Cultural and Community
Services
DERBYSHIRE COUNTY COUNCIL - STRATEGIC RISK REGISTER
CULTURAL AND COMMUNITY SERVICES DEPARTMENT 05/06
Planned Risk Mitigation
Procedures/Controls
Probability
(1-3)
Score
(1-18)
Existing Risk Mitigation
Procedures/Controls In Place
Score
(1-18)
Probability
(1-3)
Consequence
Financial (1-3)
+ Other (1-3)
Risk No.
Risk Description
Target Score
Consequence
Financial (1-3)
+ Other (1-3)
Risk Mitigation
Action Date
Existing
Score
Action
Manager
Identification
CULTURAL AND COMMUNITY SERVICES DEPARTMENT: Libraries & Heritage Division
1 Insufficient and/or unsuitable
accommodation for Service Delivery
2+2
2
2 Maintaining property in safe and
2+3
adequate condition
Shortfall in property maintenance funding
Guidance on maximum working
temperatures will impact on buildings
and vehicles
2
3 Failure to implement improvements
identified in Best Value Service
Improvement Plan
2+2
2
8
Asset Management Plan
Capital Programme PFI at South
Normanton. Joint working with other
district councils/partners.
1.6m approved for Belper Library
10 Asset Management Plan
Capital programme
Health and safety surveys
Health and safety officer
8
MM/DG
Ongoing
2+2
2
8
DQ/DG
Ongoing
2+2
2
8
MM/DG
Mar 2007
1+1
2
4
Long Eaton Refurbishment
Project
Minor refurbishment
programme
Implementation of the elements of
Complete remaining
the service improvement plan that do recommendations
not require funding have commenced
Update to Improvement and Scrutiny
Risk Ranking
Risks are ranked according to their impact (severity) and their
likelihood (probability) and this is shown diagrammatically on the
following slide
There are 3 elements to the scoring
• Financial considerations ( financial impact of the risk)
• Other considerations e.g. service disruption, damage to reputation,
claims against the council ( the impact these considerations would
have on the council)
• Likelihood (the probability of the risk occurring)
• The elements are scored between 1 and 3, with 1 being low and 3
being high
• The scores for the financial and other considerations are added
together and then multiplied by the probability score
• For example this risk scores as follows:
Financial impact 2, Other considerations 3, Likelihood 2 Therefore
the risk ranking is
2 + 3 = 5 multiplied by 2 =10
Risk Ranking
Considerations
Financial
Probability or
Likelihood
Other
1
Low
1
Low
1
Low
2
Med
+ 2
Med
x 2
Med
3
High
3
High
3
High
Lowest score 1 + 1 x 1 = 2
Highest score 3 + 3 x 3 = 18
How the CPA sees Members contributing to
this process? (1)
• The council has adopted a risk management
strategy/policy that has been approved by
members. Compliant 
• There is a member committee with specific
responsibility included in its terms of reference
to consider corporate risk management.
Compliant 
• Reports to support strategic policy decisions,
and project initiation documents, include a risk
assessment. Compliant 2 
How the CPA sees Members contributing to
this process? (2)
• The member committee with responsibility
for risk management receives reports at
least quarterly and takes appropriate action
to ensure that corporate business risks are
being actively managed, including reporting
to full council at least annually Compliant 
• The members with specific responsibility for
risk management have received risk
management awareness training.
Compliant 
How the CPA sees Members contributing to
this process? (3)
• All members have received risk management
awareness training. Partially compliant – this
toolkit is part of the process
• A senior officer and member jointly champion
and take overall responsibility for embedding
risk management throughout the council.
Compliant  Chair of Audit Committee and
Strategic Director of Corporate Resources
Getting involved
• Challenge officers about risks relating to
the Council’s policies and activities
• Identify risks when undertaking your duties
as an Elected Member and bring them to
the attention of the appropriate officer(s)
• Use this toolkit and attend risk awareness
events and training when offered
Officer support
– The Risk and Insurance Manager and the Risk
Manager are able to provide advice and guidance
– Chief Officers and their departmental
management teams understand the risks to the
services that they manage
– The Risk Management Group support initiatives
within all departments
– The Councils insurers and broker are able to
provide other specialist advice
Contacts
Members of the Audit Committee
• Councillor Walter Burrows – Chair and Member Risk Champion
• Councillor Eric Lancashire MBE
• Councillor Tracey Critchlow
• Councillor Mark Higginbottom
Officers:
• Gerald Tommy - Deputy Chief Executive and Officer Risk Champion,
Ext. 7301
• Graham Hunt – Head of Corporate Finance Ext. 7700
• Chrystal Wallage – Assistant Head of Corporate Finance (Audit) Ext.
7708
• Martin Brassington – Risk and Insurance Manager Ext. 7899
• Tom Smith – Risk Manager Ext. 7975