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A risky business Civil Society facing tough choices in a new world of risk. 2 nd November 2010 Paul Emery Head of Community and Social Organisations Bridget Colloby Marketing Manager

A risky business Civil Society facing tough choices in a new world of risk

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A risky business Civil Society facing tough choices in a new world of risk. 2 nd November 2010 Paul Emery Head of Community and Social Organisations Bridget Colloby Marketing Manager. Agenda. Introductions What this session is about Contributor input, group work Feedback and conclusions - PowerPoint PPT Presentation

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Page 1: A risky business Civil Society facing tough choices in a new world of risk

A risky business

Civil Society facing tough choices in a new world of risk.

2nd November 2010Paul EmeryHead of Community and Social Organisations

Bridget CollobyMarketing Manager

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Agenda

Introductions

What this session is about

Contributor input, group work

Feedback and conclusions

Wrap

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The two agendas for risk management

Why should you be interested in risk management?

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Controls / Assurance / Audit / Inspection

C2 What are the legal requirements for charities in relation to risk management?

Charities that are required by law to have their accounts audited must make a risk management statement in their trustees' annual report confirming that

“...the charity trustees have given consideration to the major risks to which the charity is exposed and satisfied themselves that systems or procedures are established in order to manage those risks.” (Charities (Accounts and Reports) Regulations 2008)

Major risks are those risks that have a major impact and a probable or highly probable likelihood of occurring.

If they occurred they would have a major impact on some or all of the following areas: governance; operations; finances; environmental or external factors such as public opinion

or relationship with funders; a charity's compliance with law or regulation.

Any of these major risks and their potential impacts could change the way trustees, supporters or beneficiaries might deal with the charity.

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Is this why for many charities…

Risk management is a paper exercise?

They feel they gain limited benefit from undertaking risk management?

It is a once a year process with limited involvement from the Board?

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What is risk based decision making?

All organisations exist to achieve their objectives.

The purpose of (business) risk management is to manage the barriers to achieving these objectives.

Tre

asu

ry 2

00

0 (

OG

C)

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There are two types of risks:

Direct threats (damaging events) which could lead to a failure to achieve objectives.

Opportunities (constructive events) which if exploited could offer an improved way of achieving objectives , but which are surrounded by threats.

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Business v Operational risks

Business risksThose which have been identified as potentially damaging to the achievement of the organisation’s objectives.

Operational risks

Risks which managers, staff and volunteers are likely to encounter in day-to-day work situations.

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What about insurance?

“Risk Management is not just about insurance”

80%

of risks faced by of risks faced by

organisations organisations

are are notnot

insurable!insurable!

‘‘Chance or choice’ - Chance or choice’ -

SOLACE/ZMMSSOLACE/ZMMS

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What is the context?

Significant crises impacting on organisations’ abilities to continue are now becoming one in five year events.

Hardest hitting recession for many years.

With funding resources scarce, partners want confidence that you understand and are managing your key risks.

The charity sector has become one of the major suppliers to Local Government in terms of commissioned services (estimated at over £12bn)

Society is less forgiving of failure.

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What is your role in this?

So, in effect, a [strategic] leader has (only) two jobs??

Identifying the opportunities that will lead to success(<25% of the job)

and

Managing the risks / issues / concerns which might get in the way (>75%of the job)

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What is a business risk? - definition

Risk is the variation in outcomes around an expectation

(in effect, risk management is scenario planning and management)

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The two agendasAc

hiev

e

obje

ctiv

es

Less risk

averse

Better (performance)manage

ment

Corporate

Governanc

e

Auditrequiremen

ts

Focus

on (financial) priorities

Better option

appraisal

Improved forward planning

Demonstrate

improvement

Contr

ols

/ a

ssura

nce

/ a

udit

/

insp

ect

ion

Ris

k-base

d d

eci

sion

maki

ng

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What risks does your organisation face?

The practical exercise

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Think about your organisation’s

Vision

Objectives

Strategies

Plans

And the potential barriers to success

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Introduction to research report

Public sector and wider Civil Society scopeResearch undertaken by leading third party research agency, Ipsos MoriDifferent perspectives on long term risks facing the public sector and wider Civil Society’Key sources – Public and Civil Society CEO’s, independent risk experts and academics, public poll, Zurich experts

CSR Big SocietyChange

CEO’sPublic

Experts

Zurich

LAs C&SOs Housing EducationHealth

Profile of riskContrast of opinion and importanceView of capability to mitigate risk

And, manage change

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Risks facing the sector

Directors of CSOs Public Our view

Budget cuts and income volatility

Maintaining and improving donations

Loss of funding & growing financial instability

Volunteers taking on what were previously paid roles

Fewer people volunteering Continuity & crisis response challenges

Maintaining the quality of services currently provided by

their organisation

Running public services no longer provided by government

Damage to reputation & brand equity

Changes in government policy Quality of services will decline Compromising charitable aims & purposes

Competition/survival Keeping to the purpose of the charity

A more challenging commissioning environment

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Taking the public with you

Which of these statements comes closest to your views on local councils / charities

26

17

24

24

51

59

Base: All adults aged 15+ randomly allocated question (336), fieldwork dates: 30 th July - 5th August 2010 – SOLACE 2010

Agree A more Agree B more

A: Individuals should have more responsibility for delivering local public

services because they know what the local area needs

A: Charities and voluntary groups should take on a

bigger role in the delivery of public services

B: It is the government’s job to provide public services and they should not rely on charities and volunteers to fill the gap

B: It is the council’s job to deliver local public services, as they have the expertise to do so

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People are less likely to volunteer in deprived areas

R2 = 0.9544

45%

50%

55%

60%

65%

70%

75%

1 2 3 4 5 6 7 8 9 10

CivicEngagementand formalvolunteering

% o

f people

part

icip

atin

g in

civ

ic

engagem

ent &

form

al v

olu

nte

ering

Base: 8,768 British adults, Fieldwork dates: April 2008 - March 2009 – SOLACE 2010

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CEO viewpoint

Importance/ability to deal with risks

Climate change

Operational risk management

Social risk

Reputation management

Changes in government policy

Data security

Budget uncertainty

WorkforceWorking with other organisations

*Base: 100 telephone interviews, 12 – 28 July 2010

Lower importance, Good ability to deal

Higher importance, Good ability to deal

Lower importance, Lower ability to deal

Higher importance, Lower ability to deal

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CEOs: Top risk issues

Budget uncertainty / Loss of funding

94%

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The backdrop

Fire safety

Housekeeping

Electrical wiring

Health & Safety

Capabilities

Security at site

Less Control

New Agenda

Paralysis

Opportunity

Pricing

New ways

Environment

Fear

Contracts

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Transition from uncertainty to certainty…

Major uncertainty

Spending Review

October 2010

Some certainty?

2010/11

More certainty

2012+January 2010

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Managing the transition to budget certainty

In your control

EmployeesVolunteersWhat you doContracts that you tender forChange managementCost controlSpread of revenue streamsFixed costs

Within your influence

Local authority stanceSpending of othersWhat happens re: full cost of recoveryWhat services are requiredLocal community agendaGovernment strategyMemorandum and articles

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CEO viewpoint – data security

Importance/ability to deal with risks

Climate change

Operational risk management

Social risk

Reputation management

Changes in government policy

Data security

Budget uncertainty

WorkforceWorking with other organisations

*Base: 100 telephone interviews, 12 – 28 July 2010

Lower importance, Good ability to deal

Higher importance, Good ability to deal

Lower importance, Lower ability to deal

Higher importance, Lower ability to deal

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Data security – what’s driving the risk?

Transparency– OCS wants more!

Consortia / Partnership working – Who’s got your data?

Instant media – When things go wrong they go wrong quickly!

Value of donor base to you and others – Cyber attack?

Measuring impact – more and more data, is it secure?

Technology – USB where is yours?

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Data security – can you see the risk?

Fire safety

Housekeeping

Electrical wiring

Health & Safety

Capabilities

Security at site

Shared Services / Systems

Partnership Working

Outsourcing – Supply Chains

Public Sector Delivery

Other Fraud

Social Networking

Scope of Risk

Mergers

Cyber Attack

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Risk – Data securityWhat are the potential consequences?

Reputational Damage

Public / corporate donorsLocal Authorities and Health providersVolunteersEmployeesTrustees / PatronBeneficiariesThird party suppliersInformation Commissioners Office / Fine

Crisis response and impact on BAU

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Zurich case study – the tip of the iceberg

Fine

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Zurich case study – the rest of the iceberg!

Fine

Audit and Consulting Fees

Indemnity Policies and Claims

Identity theft Redress payments

Customer Communications Exercise

Impact on BAU

Employees on project Customer acquisition / retention

Organisational Change

Technology costs Ongoing internal comms (cultural shift) New processes and procedures Office adaptations and new

equipment Increased operational costs

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Risk – data security

In your control

Partnership principles and governanceShared services contracts and controlsPolicies on social networking – communications frameworkFraud procedures, controls and systemsCrisis planningPublic sector contracts that you tender for.

Within your influence

Social networking and new media (external)Emerging fraud

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Importance/ability to deal with risks

Climate change

Operational risk management

Social risk

Reputation management

Changes in government policy

Data security

Budget uncertainty

WorkforceWorking with other organisations

*Base: 100 telephone interviews, 12 – 28 July 2010

Lower importance, Good ability to deal

Higher importance, Good ability to deal

Lower importance, Lower ability to deal

Higher importance, Lower ability to deal

Conclusions

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How does your original list of risks look now?

The practical exercise

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Your organisation’s

Vision

Objectives

Strategies

Plans

And the potential barriers to success

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The risk management cycle

RISK IDENTIFICATION

RISK ANALYSIS

PRIORITISATION

RISK MANAGEMENT

MONITORING

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Let’s do a risk ranking exercise

The practical exercise

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Likelihood - definition

Likelihood(over 2 years)

Very high

High

Significant

Low

Very low

Almost impossible

>90%

55% to 90%

15% to 55%

5% to 15%

1% to 5%

0% to 1%

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The risk profile template

A

B

C

D

E

F

IV III II I

STRATEGIC RISK PROFILE Organisation Name:

Likelihood:

A Very high

B High

C Significant

D Low

E Very low

F Almost impossible

Impact:

I Catastrophic

II Critical

III Marginal

IV Negligible

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Conclusions

Any questions / observations

‘Tough Choices’ launches on 8th November 2010

Access the report via www.NewWorldofRisk.com or complete the form to receive your copy