Gallagher Bassett Partnerships Colette Dark Risk Control Manager Gallagher Bassett ALARM SE 13 th SEPTEMBER 2006

Gallagher Bassett Session Plan l Partnership working - What does it mean ? l Managing risk in partnerships – the key challenges l Risk management considerations within partnership protocols or framework agreements

Gallagher Bassett What is Partnership Working ? n Two or more independent bodies  Public, voluntary, private n Working collectively  Each contributing resources n Toward a shared objective

Gallagher Bassett CPA - RM of Partnerships l Use of Resources Internal Control KLOE 4.1 Level 3 n The risk management process specifically considers risks in relation to significant partnerships and provides for assurances to be obtained about the management of those risks

Gallagher Bassett What makes a partnership Significant ? l Significant allocation of resource n Financial n Time / people resource l High profile l Important to key objectives / goals l Statutory function / duty

Gallagher Bassett Two Perspectives To Consider l Partnership Perspective n ‘Insider looking out’ n Risks to the partnership which present threats or opportunities to the objectives and effective working of the partnership l Council’s Perspective n ‘Looking in’ n Risks arising from the activities of the partnership that present threats or opportunities to the Councils objectives

Gallagher Bassett Case History – Failed Partnership l Project to regenerate former mining area. l Objective to establish a centre of excellence for advanced digital tech. provide training, spur to inward investment l Partnering with the Council were – n Local TEC n A major ICT company l Funding - European Regional Development Funding of £3.3m. Total investment £7m

Gallagher Bassett Case History (cont) l Centre launched as Ltd company. But trading problems resulted in liquidation within 18 months l Council acquired assets for £0.7m and other liabilities of £0.2m. Total cost of financial support cost £2m. l Attempts by Council to deliver original outputs have failed.

Gallagher Bassett Problems Identified (1) l Initial plan and options evaluation n Failed to establish likely demand for the facilities n Unclear about target market and how services would be delivered. n Did not properly evaluate the risks including the scale of financial risk (risk of grant claw back) n Failed to engage support of members n Failed to ensure robust project management arrangements.

Gallagher Bassett Problems Identified (2) l Governance Arrangements n Unclear regarding roles, responsibilities and leadership arrangements. n No protocols for reporting financial and business information to Council members (lead to issues of commercial confidentiality) n No clear measurement of output including monitoring of EDRF requirements.

Gallagher Bassett Identifying Risks in Partnerships l Strategic n PESTLE etc n Governance considerations l Operational n Threats to resources n Remember insurance risks l Relationship !! New Dimension n Leadership / Trust / Engagement / Communication / Risk Perception

Gallagher Bassett Partnership Protocol Overall guidance on when, why and how to partner n Pre partnership appraisal to include risks presented by a partnership arrangement. Partnership agreement n Aims and objectives n Measurement of output and success n Governance arrangements (including RM) n Terms of dissolution and termination (exit strategy)

Gallagher Bassett Top Ten Partnership Killers 1.For ever and ever…… 2.One-upmanship 3.Right place, wrong people. 4.Pulling rank 5.Mission creep

Gallagher Bassett lTarget? What target? lDeath by drudgery lWe know what’s best for you lStrictly on a need-to-know basis….. lOnly here for the cash Top Ten Partnership Killers

Gallagher Bassett Questions ?