Agenda item

Purpose: To set out the overarching framework for managing risk at the Council, the Council’s risk appetite and the risk management objectives for the next three years.

Catalin Bogos, Performance and Risk Manager, presented the Risk Management Strategy (Agenda item 9) which set out the overarching framework for managing risk at the Council, the Council’s risk appetite and the risk management objectives for the next three years. The recommendation was for the Committee to endorse the strategy ahead of its approval by the Executive on 29th April 2021.

Catalin Bogos advised Members that the current risk arrangements of the Council had been reviewed and consideration had been given to the best practice of the Treasury, the Government’s finance function, the Institute of Risk Management as well as bench-marking against other local authorities.

The report highlighted the internal and external context within which the Council delivered its objectives which must be considered in order to ensure that the management of risk was effective.

Internal context

The significant points relating to the internal organisational context of risk management were the continuation of the three line of defence arrangements: the streamlined internal governance arrangements, the implementation of the organisational restructure Senior Management Review 2019 and a relative reduction of the financial pressures experienced before 2019/2020.

External context

The external context for the organisation was dominated by the materialisation of one of the highest risks on the National Risk Register – an influenza type pandemic. The long-term nature of the international crisis meant that the response period overlapped with the recovery stage. The response activities translated into immediate changes in working practices (e.g. significant levels of remote working). As more information emerged about the impact, it would inform the risk identification and assessment activities. In particular, special attention would be given to requirements to re-consider the existing/traditional controls and make any relevant re-adjustments.

Council Strategy 2019 – 2023, highlighted the strong social, economic and environmental features of the District. The focus of the Strategy was to build on these strengths and achieve further improvements. This was another important factor considered in defining the Council’s risk management approach, including the risk appetite.

The report set out each stage of the risk management process and provided details about how each stage was delivered, following which relevant objectives had been set out for the next 3 years.  Because a strong risk management culture existed within the Council, most of the objectives referred to a continuation – or further development – of current arrangements.

The full list of the objectives of the risk management strategy were contained within the report, however, significant changes made to planned objectives included:

•         A slight increase to the risk appetite due to internal and external factors as outlined above, details of which had been provided in the report.

•         The threshold on the risk management matrix had been adjusted between amber and red to a figure of 8 reflecting an increased risk appetite.

•         Maintaining a risk aware culture through a common language, training and engagement, with a particular focus on the involvement of Councillors through more in-depth training.

•         Support for the introduction of a controls assurance process, so that when risk registers were presented, assurance could be given that controls were in place and doing what they were supposed to be doing.

Councillor Jeff Beck thanked Catalin Bogos for his summary of the report.

Councillor Jeff Beck referred to the Annual Governance Statement (AGS) which was approved annually by the Chief Executive and Leader of the Governance and Ethics Committee and queried this as there was no ‘Leader’ for the Governance and Ethics Committee.  Catalin Bogos clarified this should read the Chief Executive, Leader of the Council and a representative from the Governance and Ethics Committee and that the report would be amended accordingly.

Councillor Jeremy Cottam asked how an increase in risk was arrived at and valued. Catalin Bogos said the table set out in 7.3 of the report provided the definitions which should be used when determining whether a risk would have a low, moderate, major or significant impact.  When saying the Council had a higher appetite for risk this was in relation to the internal and external context of the organisation and the table showed the movement of threshold values for the impact of risks as follows:

Impact 3: £500k - £1m (was £250k - £1m)

Impact 2: £100k - £500k (was £50k - £250k)

Impact 1: Less than £100k (was Less than £50k)

This meant that encouragement was given to decision-makers to manage risk at these levels without the need to escalate and put in additional controls and spend additional resource. In addition, the new risk matrix (page 114 of the report) showed the red, amber and green rating based on the above thresholds reflecting the increased risk appetite and tolerances.  Catalin Bogos added that a key objective was that the training for the Committee and other Officers would focus on the technical matters of what these changes meant for the Council. 

Councillor Rick Jones said he and other Members had felt the Council had been overly risk-adverse in the past so was supportive of this new direction and the training which would be given to understand how to arrive at, and manage, the new threshold values.

RESOLVED that the Governance and Ethic Committee endorsed the Risk Management Strategy and the associated risk appetite, and noted that the Executive would be asked to approve this Risk Management Strategy at their meeting on the 29th April 2021. This included a recommendation that Governance Boards would approve the risk appetite on new projects within their remit and Corporate Programme Board would have oversight of this.