Transcript Operational Risk Management - The Global Fund to Fight

Operational Risk Management
For effective Grant Management
LFA Training
February 2014
What is “Risk”?
Anything that diminishes GF’s ability to save
lives/have an impact on the three diseases.
Impact
Risk
Operational Risk is the possibility of
reduced program impact, not achieving
targets, and/or wastage or misuse of
resources due to specific processes or
actors in our Performance-Based
Funding model not operating as
intended
M&E is the field
most directly
focusing on the
Global Fund’s core
risk area.
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Characteristics of a “Risk-Based” Approach
Risk is forward-looking
• Assess likelihood and severity of future
problems
Go where risk leads you
• Shift of focus from PR to beneficiary/impact
• Shift of process from checklists to critical
analysis
• Emphasis on “unknown unknowns” becoming
“known unknowns”
LFA proactively alerts GF to potential
issues
LFA observes entire grant implementation
arrangement, not just PR
LFA services differentiated (tailored to
need)
HOWEVER: CT led-process
Prioritize
• Balance short-term risk and long-term risk
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How is the Global Fund thinking about Operational Risk
Management (ORM)?
Key goals of better ORM
Extensive benefits from better ORM
Identifying, prioritising and proactively
mitigating risks, not avoiding them
Increased program impact, reduced
wastage and misuse of resources
Targeting resources and scrutiny
according to level of risk and impact
Reduced bureaucracy – replacing our
"one-size fits all" policies & processes
Working better with in-country partners
to strengthen risk management activities
Clearer accountability for risk
management and response across actors
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Secretariat's risk assessment framework considers four Risk
Types, based on our grant management objectives
Four key objectives
Four key types of risks
Achieving grant performance targets
and program impact, while ensuring aid
effectiveness and sustainability
1. Programmatic &
Performance Risks
Efficient use and accounting of Global
Fund investments and other resources
2. Fiduciary &
Financial Risks
High quality health services, and health
products and equipment, in Global Fund
funded programs
3. Health Services &
Health Products
Quality Risks
Effective governance, oversight and
grant management by the Global Fund,
CCMs, PRs, SRs, LFA, and stakeholders
4. Governance, Oversight
& Management Risks
Decision-making in grant management often
driven by trade-offs between these objectives
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Four Risk Types are broken down into 19 Risks related to
specific negative outcomes we aim to prevent in grants
Operational Risks
Risk
Types
1. Programmatic &
Performance Risks
2. Financial &
Fiduciary Risks
3. Health Services &
Products Risks
4. Governance, Oversight
& Management Risks
1.1 Limited Program
Relevance
2.1 Low Absorption or
Over-commitment
3.1 Treatment Disruptions
4.1 Inadequate CCM
Governance & Oversight
1.2 Inadequate M&E &
Poor Data Quality
2.2 Poor Financial
Efficiency
3.2 Substandard Quality
of Health Products
4.2 P Inadequate PR
Governance & Oversight
1.3 Not Achieving Grant
Output Targets
2.3 Fraud, Corruption, or
Theft of Global Fund
Funds
3.3 Poor Quality
of Health Services
4.3 Inadequate PR
Reporting & Compliance
1.4 Not Achieving
Program Outcome &
Impact Targets
2.4 Theft or Diversion of
Non-financial Assets
3.4 Inadequate Access
and Promotion of Equity
& Human Rights
4.4 Inadequate Secretariat
and LFA Management &
Oversight
1.5 Poor Aid
Effectiveness &
Sustainability
2.5 Market and Macroeconomic Losses
Risks
2.6 Poor Financial
Reporting
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Contributing Factors are considered to qualitatively assess
Likelihood and Severity, which determines the Risk Level
Risk Definition, Factors
and Time Horizon
1
2
3
Risk Definition
• "What bad outcome could
occur in this grant?"
Contributing Factors
• "What factors cause or
provide information about
this risk, and should be
considered when
assessing it?"
Time Horizon
• 12 months from the date
of assessment for all risks
Rate Likelihood
and Severity
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Likelihood
• "What is the chance of
the risk occurring within
the time horizon, based
on the contributing
factors?"
Risk Level
Very High
High
Medium
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Severity
• "Assuming the risk
occurs, how severe is its
impact expected to be,
based on the contributing
factors?"
Low
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The Country Teams can create linkages between various risks
in the heatmap
1 Programmatic &
Performance Risks
2 Financial & Fiduciary
Risks
3 Health Services &
Products Risks
4 Governance, Oversight
& Management Risks
1.1 Limited Program
Relevance
2.1 Low Absorption or
Over-commitment
3.1 Treatment
Disruptions
4.1 Inadequate CCM
Governance & Oversight
1.2 Inadequate M&E and
Poor Data Quality
2.2 Poor Financial
Efficiency
3.2 Substandard Quality
of Health Products
4.2 Inadequate Pr
Governance & Oversight
1.3 Not Achieving Grant
Output Targets
1.4 Not Achieving
Program Outcome &
Impact
Targets
1.5 Poor
Aid
2.3 Fraud, Corruption or
Theft of Funds
3.3 Poor Quality of
Health Services
3.4 Poor Access and
Promotion of Equity &
Human Rights
Legend
4.3 Inadequate PR
Reporting & Compliance
4.4 Inadequate
Secretariat and LFA
Management &
Effectiveness and
Sustainability
2.4 Theft or Diversion of
Non-Financial Assets
2.5 Market and
Macroeconomic Losses
2.6 Poor Financial
Reporting
Very High
High
Medium
Low
Unknown
This assessment
Previous
assessment
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Lessons learnt from the existing grants should be
the platform for designing new grants
Current Grant
Risks and
implementation
arrangements
• Prioritized Interventions
• Effective Risk
Management Actions
• Efficient implementation
arrangements
• Firmed up TA Plans
• Risk management roles
of partners
Country Dialogue
Geneva
12/08/2013
New Grant
Residual
Risk / New
Risks
Implementation of prioritized Interventions and the key risk
management actions provide reasonable assurance about the
outcome.
Implementation
Arrangements
Others
Partners
PR-2
Risks at the
disease Portfolio
Level
PR-1
Risk Mitigation Actions
Alignment with Country Team create s synergy in the risk management
processes
Geneva
12/08/2013
Broad set of benefits
Objective
Alignment between
PR, SR, CCM,
Partners and CT on
key Risks
Effective use of
Partners
Effective SR /SSR
management
Types of actions anticipated
• Concerted efforts to address the risks jointly
• Complimentary efforts to by all stakeholders – accountability
• More active use of reprogramming and re-budgeting
• Prioritized, specific and timely Technical Assistance
• Strategic dialogue with Partners
• Tailor scope of supervision to level of effort, to Risks
• Improved specificity on areas that need special attention
• Grant outcomes are influenced by risks outside the control of PRs
Escalation of
broad risks to CCM
• CCM may be able to take lead in addressing disease and country
level portfolio level risks.
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What risks fall within M&E’s remit?
1
Interventions and Activities Target Disease and Key Populations
2
$
- Given OIG findings,
we can no longer
assume that
expenditure
documentation & M&E
data are reliable
evidence of activities
having happened.
Quality & Quantity of Planned Activities
3
Activities
Outcomes
Linchpin between $
and impact
Impact
4 Reliable Data Exists
so that GF Can Track its
Link to Impact
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Benefits of shifting emphasis to real-time supervision of
program activities
Optimal Detection, Prevention and
Mitigation Technique:
Health Services
View of Program Quality
View of Equity/Human Rights Issues
Increased Reliability of M&E Data
Trainings
Prevents Extreme Theft of Funds
See Full Scale of Financial
Inefficiencies
BCC
Support
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IMPLEMENTATION
GRANT MAKING
Tools for Strengthening Risk-Based Approach
Organogram
• Implementers Down to Beneficiaries
• Key Actors External to Implementation
Arrangement
UNDP
• Fund, Asset, Data Flow
MOH
• Roles & Responsibilities
• Unknowns
%
%
Map
Detailed
Budget
Procure HPs (100%)
30
%
%
%
%
%
Store HPs
(100%)
%
%
10
%
CMS
PNLP
MIS
%
%
50
%
10
%
40
%
%
%
Store & Distribute
HPs
(100%)
Implementer
Capacity
Assessment
Mass Media (20%)
Trainings (20%)
Supervision (15%)
HR (40%)
Reg
20
%
Reg
%
%
• Evaluate activities for
programmatic relevance
20
%
Dist.
Store & Distribute HPs (40%)
M&E (30%)
Supervise health service (15%)
%
%
10
%
Clinic
(88)
Geographical
Map
Administer Drugs (75%)
Track Patients (20%)
Record Pis (5%)
• Program Activity Locations
across all 3 diseases
LFA
Verifications
and Spot
Checks
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Basic Benefit of Mapping a Grant:
Clarity on Process, Responsibility, Fund
Flow
Initial Map: Lots of Unknowns
GF
UNDP
MoH
MIS
PNLP
(PR)
CMS
Regional
MoH (how many?)
NGO SRs
Regional
CMS (3)
(how many?)
?
?
Clinics (how
400
patients
many?)
?
MARPS
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Some Real-Life Examples
• Implementation Map focusing on Beneficiaries
• Implementation Map with OSDV and Site Visits recorded
• Geographic Map
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