Transcript Embedding Risk Management into Major Change Programmes

2nd November 2006
Managing Risk and Uncertainty in the Public Sector:
Corporate Governance - the Key to Success
ALARM South East Conference 2006
Judy Jones Risk Consulting Practice, Marsh Ltd
Tel: 07787 560658
e-mail: [email protected]
Agenda

“Corporate governance”
– background to corporate governance in the
public sector
– what is it?


What’s it got to do with managing risk and
uncertainly?
A reality check!
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Corporate governance
Background in the public sector
Development of the concept
1992
Committee on the Financial Aspects of Corporate Governance
(The Cadbury Committee)
1994
The Rutteman Committee
1995
The Greenbury Committee
1998
The Hampel Committee
1999
The Turnbull Committee
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Public sector drivers
Nolan Report into Standards in Public Life
DETR “Modernising Local Government 1999”
Audit Commission “Called to Account”
CIPFA “Framework for Public Service Bodies”
CIPFA “Corporate Governance in the Public Sector”
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The Nolan Committee
7 Principles of Public Life
Leadership
Honesty
Openness
Accountability
The 7 Principles
of Public Life
Selflessness
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Objectivity
Integrity
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Public sector drivers
Nolan Report into Standards in Public Life
DETR “Modernising Local Government 1999”
Audit Commission “Called to Account”
CIPFA “Framework for Public Service Bodies”
1994: CIPFA “Corporate Governance in the Public
Sector”
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Public sector drivers
2000: SOLACE “Chance or Choice - Risk Management
and Internal Control Guidance for Local Government”
2001: CIPFA/SOLACE “Corporate Governance in Local
Government - A Keystone for Community Governance”
2005: ODPM and CIPFA “The Good Governance
Standard for Public Services”
2006: Department of Health “Integrated
Governance Handbook”
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“Corporate governance”
What is it?
A definition of governance
The local authority context
“Governance comprises the systems and processes
for the direction and control of local authorities
through which they account to, engage with and
lead their communities.”
[Source: CIPFA/SOLACE Good Governance in Local Government: A Framework
Consultation Draft June 2006 Paragraph 1]
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An overview of governance

Applies to an organisation or partnership

Aims to ensure that it:
– fulfils its overall purpose
– achieves its intended outcomes for citizens and
service users;
– and operates in an effective, efficient and
ethical manner
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What’s it got to do with managing
risk and uncertainty?
Core principles of good governance

Focusing on purpose and
on outcomes for citizens
and service users

Taking informed,
transparent decisions and
managing risk

Performing effectively in
clearly defined functions
and roles


Promoting values for the
whole organisation and
demonstrating the values
of good governance
through behaviour
Developing the capacity
and capability of the
governing body to be
effective

Engaging stakeholders and
making accountability real
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“Taking informed and transparent decisions and
managing risk”
Being rigorous and transparent about how decisions are
made and listening and acting on the outcome of
constructive scrutiny
Having good quality information, advice and support to
ensure that services are delivered effectively and are
what the community wants/needs
Making sure that an effective risk management system is
in place
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An “effective RM system”
A planned and systematic approach to identifying,
evaluating and responding to risks and providing
assurance that responses are effective.
Should consider the full range of the organisation’s
activities and responsibilities, and continuously check
that various good management disciplines are in place.
Supports the annual statement on internal control.
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An effective risk management system
should include….
Identifying key strategic,
operational and financial
risks
Assessing the possible
effects that the identified
risks could have on the
organisation
Agreeing on and
implementing
appropriate responses to
the identified risks
Putting in place a
framework of assurance
from different sources to
show that risk
management processes,
including responses, are
working effectively
Reporting publicly on the
effectiveness of the risk
management system
through, for example, an
SiC including, where
necessary, an action
plan to tackle any
significant issues
Making it clear that the
governing body carries
ultimate responsibility for
the risk management
system
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Risk Management guidance

Turnbull and the Treasury “Orange
Book”

National Audit Office

Cabinet Office

Institute of Risk Management (IRM),
Association of Insurance and Risk
Managers (AIRMIC), Association of
Local Authority Risk Managers
(ALARM) risk management standard

Specific guidance relevant to various
sectors e.g by Audit Commission and
education funding councils
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Risk Management guidance (examples)
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A reality check!
Where are we now?

RM Policies and Strategies

RM Training

Risk Management Groups

Risks associated with decision-making

Risk management of major change

Projects and partnerships

Embedding RM at all levels
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SUMMING UP
and
QUESTIONS
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