Press Release - Supporting Innovation: Managing Risk in
Government Departments
17 August 2000
Sir John Bourn, head of the National Audit Office, today
reported to Parliament that properly planned and managed risk
taking by government departments can promote innovation and lead to
improved value for money for taxpayers. Departments are
increasingly considering how best to devise and implement effective
risk management strategies.
By September 2000, all departments must set out how they are
going to handle the risks for which they are responsible, and the
NAO report aims to help government departments improve their
management of risk and assist them in well thought through risk
taking.
The Modernising Government programme encourages departments to
adopt well managed risk taking where it is likely to lead to
sustainable improvements in service delivery. Government spending
and receipts of over £600 billion cover a range of activities such
as provision of social welfare benefits, health care, procurement
and management of major construction projects, and the collection
of revenue. All departments' activities involve some degree of
risk, and a constructive approach to risk - taking can provide
opportunities to deliver services in new ways. Managing such risks
is important as it can lead to better service delivery, more
efficient use of resources, help minimise waste, fraud and poor
value for money, and promote innovation.
The report draws on an NAO survey of all government departments.
It sets out examples of good practice in risk management from
public and private sectors, including the approach to countering
risks involved in implementing innovative approaches to the early
release of prisoners and crime reduction in schools. The report
notes the progress made in the development of guidance on risk
management strategies and frameworks by HM Treasury and the Cabinet
Office.
- Eighty two per cent of departments in the survey agreed that
risk management is important to the achievement of their
objectives, although few had risk management objectives or
policies. 57 per cent of departments say they had procedures for
reporting risks; and only a third say that regular risk reports
were an effective component of managing risks in their
department.
- While departments recognised that delivering services in new
and innovative ways is a risk in itself which needs to be managed,
four fifths say they support innovation. Two fifths, however,
regarded themselves as more risk averse than risk taking, while
only one fifth regarded themselves as more risk taking. The report
identifies some of the reasons for risk aversity (for example
culture of the organisation, lack of expertise in risk management,
fear of project failure) and some incentives to encourage risk
taking (shifting away from a blame culture, improved communication
about risks, dissemination of good practice on risk
management).
- Central to the Modernising Government initiative as a way of
improving service delivery is more joint working between
departments, and between public and private sector organisations.
About half the departments in our survey identified the risks
arising from new ways of working, although just 13 per cent of
departments agreed that they know about the strengths and
weaknesses of the risk management systems of other organisations
they work with.
Once departments have their risk strategies and frameworks in
place, they will need to develop action plans for implementing them
and ensure that their staff understand the importance and the
benefits of risk management and innovation and how to apply
them.
The report suggests some key questions which departments might
ask themselves to assess whether they have a sound approach to
managing risks: such as whether the management of risk is closely
linked to the achievement of the department's key objectives and
whether the risks associated with working with other organisations
are assessed and managed.
Sir John Bourn said today:
"This report aims to stimulate and encourage good
practice in risk management. There are inevitable risks associated
with new ways of working as departments strive to improve and
modernise the delivery of public services for the benefit of
citizens and businesses. Properly managed, risk taking and
innovation can lead to improved value for money for
taxpayers."
Notes for Editors
In this report risk in the public sector is
something happening which may have an impact on the achievement of
objectives. Risk management is the structure
process and culture directed towards managing potential
opportunities and threats to the achievement of government
objectives.
The Cabinet Office White Paper "Modernising Government" was
published in March 1999.
The National Audit Office survey and other aspects of the study
were conducted with the assistance of PricewaterhouseCoopers. The
survey covered 257 government departments, agencies and
non-departmental public bodies, collectively referred to as
'departments'. The questionnaire and a summary of the responses can
be viewed on the National Audit Office web site.
Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.org.uk/ Hard copies can
be obtained from The Stationery Office on 0845 702 3474.
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office employing some 750 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 56/00
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