Member Training ALARM South East - November 2007 Abigail Simpson and Bob Ellison

1 Marsh Objectives  Understand: - Risk management requirements for Members - Members risk management responsibilities - Issues and challenges in training members  Discuss and debate: – Experiences – good and bad – Discuss how Councils engage Members in risk management

2 Marsh Risk and Risk Management  What is risk? “Risk is the threat that an event or action will adversely affect an organisation’s ability to achieve its objectives and to successfully execute its strategies” (Audit Commission, “Worth the Risk”, 2001)  What is risk management? “Getting the right balance between innovation and change on the one hand, and avoidance of shocks and crises on the other – is now central to the business of good government” (Tony Blair, “Risk, Improving Government’s Capacity to Handle Risk and Uncertainty”, 2002)

3 Marsh Modernising CPA Risk management in context Governance à Proactive management of new risks à Challenge the way things are done à Ensure continuous improvements are made à Consider new approaches to service delivery à Set demanding but realistic performance targets à Establish a clear programme of action Members??

4 Marsh Regulatory requirements Use of Resources - Internal Control Members training is crucial to CPA score  Key Line of Enquiry 4.1 The Council manages its significant business risks  Audit Focus Evidence that: - The Council has a risk management process in place - The risk management system covers partnership working (Audit Commission, “Key lines of enquiry for use of resources 2008 assessment”, 2007)

5 Marsh Internal control – criteria for judgement  Level 3 “must haves” - The members with specific responsibility for risk management have received risk management awareness training - Members with responsibility for corporate risk management receive reports on a regular basis and take appropriate action to ensure that corporate business risks are being actively managed, including reporting to the full council as appropriate (Audit Commission, “Key lines of enquiry for use of resources 2008 assessment”, 2007)

6 Marsh Internal control – criteria for judgement  Level 4 - A senior officer and Member jointly champion and take responsibility for embedding risk management throughout the council - All members receive risk management awareness training appropriate to their needs and responsibilities (Audit Commission, “Key lines of enquiry for use of resources 2007 assessment”, 2006)

7 Marsh What does this mean for Members?  Is it just a tick in the box!?!  Elected members are responsible for governing the delivery of services to the local community  Members have a responsibility to understand the strategic risks that their council faces, and to decide how these risks should be managed.  They should not seek to avoid or delegate this overall responsibility as it is key to their stewardship responsibilities

8 Marsh Members responsibilities - 1 Members should:  Seek implementation of a strategic risk management process  Agree on the member and officer structures for planning and monitoring risk management  Correctly position risk management as a strategic and operational tool  Promote the desired mindset and attitude that is essential for successful implementation and robust, ongoing risk management

9 Marsh Members responsibilities - 2  View the process as a significant change management exercise  Take a top-down approach, focusing on issues of corporate significance rather than a ‘bottom-up’ exercise  Require officers to summarise the main messages emerging from the operational level, and from best value and risk self assessment workshops  Aim for continual improvement on a longer-term basis Is member training enough?

10 Marsh Break out session Challenges in Member Engagement

11 Marsh What happens when risk management doesn’t work properly? ABC Council – major fraud  District Auditor identified “serious failings allowing abuses and junketing of scandalous proportions”  Member and officers’ resignations and dismissals  Prosecution What could members have done?

12 Marsh What happens when risk management doesn’t work properly? XYZ Council  Council induced property developer to build shopping mall  Did not disclose information about another similar development  Developer sued Council for £50m What could members have done?

13 Marsh Break out session Overcoming the Challenges

14 Marsh Summary  Member engagement is not just training – Way of life, culture, real involvement  But, how far do they get involved? – Don’t forget the officers – What about the partners  Risk Management Goals  Proactive, positive and pragmatic  True integration of risk management across the authority

15 Marsh Questions?

16 Marsh The information contained in this presentation provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisors regarding specific coverage issues. This document or any portion of the information it contains may not be copied or reproduced in any form without the permission of Marsh Ltd, except that clients of Marsh Ltd need not obtain such permission when using this report for their internal purposes. Marsh Ltd is authorised and regulated by the Financial Services Authority © Copyright 2007 Marsh Ltd All rights reserved