Risk management in asset transfer Community Matters Conference 26 th September 2008 Tony Rich Rich Regeneration/DTA

Guide to managing risks in asset transfer (July 08) ► There are common risks in asset transfer (some were mentioned in the Quirk Review Report) ► There are established ways of dealing with them ► Need to remember that no action is ‘risk free’ (e.g. there are risks in ‘doing nothing’) ► Risks can affect both main partners i.e. the local authority and the third sector partner (as well as the wider community) ► Asset transfer may not be the best option –need to be clear why ownership/management is needed at the outset and what the capacity of the third sector organisation (TSO) is

Broad processes to manage risks Taking a strategic approach: ► ‘Joined up’ reviews of asset portfolios and need surveys (where are the assets and how well used are they?) ► Community engagement to establish demand for asset transfer (do they want greater control?) On individual asset transfer proposals: ► Social benefit tools (as being developed through the AA programme)– can build credibility both for the TSO and for community use of the asset ► Quality standards e.g. CM ‘Visible’, DTA ‘healthcheck’ ► Use of tenure to minimise risk The Pool

Social benefit v. financial value of assets Benefits v Value Benefits case to be measured in terms of economic, social or environmental well being of the community. Examples include: additional jobs, no. of volunteers, training places, additional investment, improved safety, improved health, reduced travel and carbon reduction Possible to assess social benefit of the proposed use of the asset –sometimes in a quantified way –and use this to discount open market value. It is also a way of demonstrating that the Council is achieving equivalent value for its asset i.e. minimises the risk of ‘lost’ value to the Council A social benefit assessment tool is currently being developed and piloted through the demonstration programme Measurable Benefits Full Value Nil Value 5

Common risks RiskWho bears the risk? Lack of resources to purchase/refurbish asset Third sector organisation (TSO) Confusion between rolesLocal authority, third sector Limited potential for enterprise with asset TSO Lack of skills, expertise on asset transfer Local authority, TSO ‘capture’ of assetLocal authority Reliance on small no. of volunteersTSO Lack of skills in asset managementTSO Limits ability to plan strategicallyLocal authority The Pool

Managing risks in asset transfer ► One way to deal with risk will be not to take on the building in the first place ► The alternative is to manage or mitigate that risk ► The guide to managing risks in asset transfer seeks to:  identify possible risks of asset transfer;  the likely impact;  why it needs to be considered; and  possible ways of managing it. ► One way of monitoring risk is by drawing up a risk log The Pool

Asset Transfer risk register/log extract Description of Risk Example impacts Likelihood (1-5 5=more likely) Example countermeasures TSO proposes vague community empowerment objectives Lack of ‘buy in’ from local community 1Carry out needs and interests surveys at outset (what is the link to community needs?) LA lacks capacity to support the asset transfer Failure of transfer (and possibly TSO) 2LA adopts asset transfer protocol with corporate ‘buy in’ (what is the on- commitment of the LA?)

Asset Transfer risk register/log extract (cont.) Description of Risk Example impacts Likelihood (1-5 5=more likely) Example countermeasures TSO lacks funds to purchase/refurb ish the asset Project collapses/comm unity let down 4Phase improvement programme How robust is the TSO business plan? Asset not used in public interest Local resentment and risk to community cohesion 2Use expectations document, conditions in lease What does the lettings policy say, how can it be monitored?

Managing risks in asset transfer - conclusions ► Quality assurance approaches are useful in demonstrating good accountability and governance ► The Advancing Assets for Communities – ‘social benefit tool’ includes a section on ‘organisation robustness’ ► Asset transfer needs to be a local authority corporate priority - with risk management as part of the approach ► Negotiated tenure can be a tool to reduce risk but must meet the needs of both parties ► “the existence of risk should not be a barrier asset transfer” – Quirk Review (May 2007) ► Need to remember that public and private sector projects can also fail – not a reason not to try!

Small group discussion ► Please form small discussion groups ► Use the risk log extract circulated ► Try to suggest measures to counter the risks listed ► Feedback on this and any other issues raised The Pool

Contact details ► Tony Rich ► M: ► E: ► W: ► W: