October 2010

A quick Google news search this week using the term "public sector" returned thousands of articles with one word featuring rather heavily throughout - "risk".

"More than 1300 council staff at risk"

"Social care at risk"

"Libraries, youth clubs and parks at risk"

"Risk of union action"

The list goes on......

Therefore, with so much "at risk" it is critical that Local Authorities effectively manage the risk function better than ever before. This is a very real challenge that faces authorities as they attempt to minimise the impact of recently announced cuts as much as possible. Add to this the pressure from the media who are rightly raising concerns that it will be the most vulnerable that are hit the hardest, councils need to embed risk management deep into their core processes to ensure cuts are made in the right places whilst ensuring that services are maintained.

These thoughts echo the recent comments made by the CEO of the public risk management association, Alarm. Dr Lynn Drennan says "risks facing the public sector in the light of the CSR cuts include loss of key personnel, a reduction in the quality of services being delivered, reputational damage and public dissatisfaction. Organisations may also face industrial action and it is therefore imperative that risk management is high on the senior management's agenda, to make sure these threats are identified and mitigated."

The Institute of Internal Auditors' Chief Executive, Ian Peters also warned that sweeping spending cuts would "bring about change and new risks of many types for many organisations within the public sector".

And during change, the authority is more at risk as Alarm Chair, Tracy Barnett explained. "There is a real risk of increased instances of fraud and financial irregularity. During changes to organisational structures, there is a strong possibility that control systems will break down, putting the authority at risk. It is well documented that, in times of change and dissatisfaction, instances of fraud rise. This is particularly true when staff are disgruntled, which is invariably the case when major restructuring or redundancies occur".

Despite the obvious need for better risk management the Institute Auditors has raised concern that government department might, in the urgency to find cost savings and amid losing staff, lose sight of emerging risk as business models change.

So during these tough times of change, it is important for Local Authorities not to lose sight of the risk management function. Many Local Authorities are currently managing risk in a very proactive way and it would be detrimental for organisations to damage such a vital function.

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