LONDON BOROUGH OF SOUTHWARK

Transcription

1 APPENDIX 1 LONDON BOROUGH OF SOUTHWARK The annual report to the Audit & Governance Committee on Risk and Insurance for 2011/12, and the key corporate risks Presented to the Audit & Governance Committee meeting: 13 November 2012

2 Southwark council 2 Contents Section 1. Introduction Risk Management Overview Progress with risk management objectives for 2011/ Risk management objectives for 2012/ Risk Profile Risk Categories Risk Themes Corporate Risk Register Insurance Overview Progress with insurance objectives for 2011/ Objectives for 2012/ Insurance Claims Breakdown... 9 Appendix A The key corporate risks... 11

3 Southwark council 3 1. Introduction This is a combined report summarising the work of the corporate risk and Insurance team (the team) for the year ending 31 March 2012, and also reporting on the council s risk register. The report provides an overview of the key risk and insurance activities, progress with objectives up to 31 March 2012, and also an overview of objectives for 2012/13 year. The report also provides details of the council s risk profile, the key corporate risks and the insurance claims experience.

4 Southwark council 4 2. Risk Management 2.1 Overview The team is responsible for managing the council s risk management process and providing various forms of risk management support to council departments and key council projects and decisions. In May 2012 the council joined the CIPFA Risk Management benchmarking club, in which the risk maturity level of the council was assessed using the ALARM national performance model for risk management and compared to the other 46 members of the club. The information received so far suggests that the council is performing above average and the maturity rated as Embedded and Integrated which means that risk is considered as a matter of course and embedded in key processes, although some areas of improvement have been provided for consideration. Further information is awaited from CIPFA to enable a comparison to be made against other councils with a similar profile to our own. Further improvements will be incorporated into the team s objectives for 2012/ Progress with risk management objectives for 2011/12 Up to the end of March 2012, the team was focused on utilising various risk management techniques to improve insurance risk management. This was achieved by: Creating an insurance risk register which is a register of all high risk insurance claims which are then reported on a regular basis to the corporate governance panel. Provision of risk management funding and support on key insurance risk areas, such as tree root claims as a result of subsidence. Introduction of contractual insurance risk management protocols for both the Highways maintenance contract and the new Housing maintenance and repairs contract. 2.3 Risk management objectives for 2012/13 The risk management objectives for 2012/13 are focused on: Promotion of risk management via enhanced communication and risk management training. The training is available via the council learning portal and will be available for all managers throughout the council. Review and update on risk management strategy and processes (to include where relevant the results of the CIPFA benchmarking exercise previously referred to in section 2.1)

5 Southwark council Risk Profile The council s risk profile is made up of the key risks and themes that the council faces in achieving its corporate aims and objectives, and is derived from an identification, assessment and mitigation of risk at departmental level based on the council s tolerance to these risks. The key risks facing the council are then categorised to help identify risk themes and the movement of risk Risk Categories The council uses the following risk categories to capture risk: Economic (e.g. credit crunch impacting on service delivery) Financial (e.g. budgetary constraints) Legal & Regulatory (e.g. not complying with a statutory duty) Operational (e.g. services not being delivered) Reputational (e.g. failures of service which attract media attention) Staffing & Culture (e.g. recruitment & retention) The 2011/12 split of number of risks by risk category is displayed in the diagram below with the split for 2010/11 included for comparison. The overall distribution on 2011/12 across all risk categories is not significantly different from that in 2010/11. Percentage Risk by Category 45% 40% 35% 40% 36% 30% Percentage 25% 20% 15% 25% 24% 12% 12% 12% 15% % 5% 3% 5% 9% 7% 0% Economic Financial Legal & Regulatory Operational Reputational Staffing & Culture Category.

6 Southwark council Risk Themes The following are the descriptions of the key risk themes within the council. The key risk themes were identified by reviewing the council s risk registers by risk sub-category and drilling down into the detail to find common risk themes. The table below provides a summary of the key risk themes across the risk register for 2011/12. Although a number of the risk themes are similar to those reported in the 2010/11, there have been new risk themes identified around technology, impact on funding from demand led services. Risk Sub-Category Detailed Issues Service Delivery Ineffective response to a major incident Failure of a strategic partner or service provider Changes in capacity to deliver services Customer service failure Prolonged reduction in service Technology Major cross council systems failure Prolonged reduced operating efficiency Critical system failure resulting in corruption/ loss of information/ failure to access Transition risk Funding Changes to allocation of funding Achievement of budget savings Achievement of efficiency targets Demand led increased costs Changes in Southwark population Reputational Investment levels on council stock and other assets Breach of Data Protection Act or Freedom of Information requirements Speed and scope of regeneration initiatives High level litigation Key service failure

7 Southwark council Corporate Risk Register The Corporate Risk Register is built up from departmental risk registers which are owned and managed by each department. Via the network of departmental risk champions, the risks and mitigations are updated by departmental Senior Management Teams on a regular basis. It is these individual risk registers, stored on the council risk software system, that are used to build the corporate risk register. The key risks across the council s departmental registers are recorded on the corporate risk register. This risk register records the risk, assessment score, ownership and action plan to manage and mitigate the risk. The top risks by score which are contained on the corporate risk register are shown in Appendix A. The table below provides a breakdown of the number of risks (by their risk score) across all council departments. Risk Assessment Score Number of Risks Range 2010/ / Amber Yellow Green The total number of risks is 169, an increase from 156 risks in 2010/11. The number of risks assessed as red has decreased in the past year, with the other score ranges having stayed the same or increased. This decrease in the number of red risks may be as a result of a number of reasons: the council actively taking action to manage risk down; the risk actually no longer being a risk; or risk reducing due to changing circumstances.

8 Southwark council 8 3. Insurance 3.1 Overview The team is responsible for arranging appropriate corporate insurances to protect the council against insurance risk, provide insurance support and information to internal and external parties, and also to lead on the most significant insurance claims made against the council. In May 2012 the council also joined the CIPFA insurance benchmarking club, in which the council s approach to insurance was compared against 46 other unitary authorities. This report offered assurance that the insurance premium costs, arrangements for insurances and claims experiences were broadly in line with other authorities. 3.2 Progress with insurance objectives for 2011/12 The team insurance objectives were primarily focused on the embedding of insurance with the existing risk management function, and also to make certain operational improvements to the insurance approach. The objectives and key improvements were: Consolidation of the steps already taken to improve the insurance arrangements: fully embedding the communication process for insurance matters; testing and revising insurance processes; further assessments of insurance risks to strengthen where possible insurance policy coverage. Undertaking more sophisticated analysis to help identify insurance cost and claims trends and identify areas where active risk management controls were required. First step taken in the process to bring all corporate insurance contracts into a single procurement process. All contractors aligned to a 2015/16 renewal year and a single renewal date. Insurance subrogation activities have been implemented in an attempt to recover council insured and uninsured costs. (Subrogation being when the council attempts to recoup expenses for a claim it paid out when another party should have been responsible for paying at least a proportion of that claim). 3.3 Objectives for 2012/13 In 2012/13, the Corporate Risk and Insurance team has continued to seek insurance subrogation opportunities, provide further claims analysis to aid the appropriate management of insurance and continue to promote the team across the council. In addition the team are:

9 Southwark council 9 Reviewing the need for help and support of the small number of insurance activities carried out by other council departments. For example, it has already been agreed that the Commercial insurance property policy will form part of the Corporate Insurance procurement in Initiating a single combined insurance procurement. There are a number of corporate insurance contracts and considerable resources are required to carry out each tendering exercise. Now that the contract end dates have been aligned, the team has the opportunity to bring all the major insurance contracts together into a single insurance tendering exercise. This will enable to the council to be in a good position to achieve purchasing discounts on insurance premiums in an increasingly difficult insurance market. There will also be efficiency savings from only running a single procurement, allowing the team to focus on other priorities as well. The first time the Council can procure all insurances in a single procurement is 2013/14. However it is not the best time for the council to procure due to the volatility in the external insurance market. Therefore, the target date is for 2015/16 to carry out this single procurement exercise. In the meantime the council is taking steps to strengthen the council s insurance position. 3.4 Insurance Claims Breakdown In 2011/12, 640 new insurance claims were received by the Corporate Risk & Insurance team; these were split by number and percentage of claims as follows: 2010/ /12 Total % Total % Employers Liability Public Liability - Highways Public Liability - Housing Public Liability - Tree root related subsidence Public Liability - Other Schools (property) Property/ Asset Claims TOTAL

10 Southwark council 10 This table shows a reduction in Highways claims where much work has been done to reach agreement with the Highways maintenance contractor who now take responsibility for dealing with a number of the Highways claims that relate to their service delivery. There has been an increase in Housing claims and action is being taken during the course of this year, similar to action already taken on Highways claim, to identify and focus risk management activities. Please note that on average 60 percent of liability claims that are notified to the team, are successfully denied on the basis that the council is not legally responsible for the claimants loss.

11 London Borough Southwark 11 Appendix A The key corporate risks Category Department Risk Description Risk Assessment Financial All The introduction of the Welfare Reform creates direct financial pressures, and also indirect financial pressures on the Council though increased recourse to public funding by those affected by the reform June 2011 New Risk October 2012 Legal and Regulatory Housing Potential serious breach of statutory regulations leading to financial loss and damage to reputation. Legal and Regulatory Finance and Corporate Services Lack of clarity/ uncertainty as to the impact of the council tax reduction scheme making it difficult to assess implications for staffing resource and organisational arrangements such that the council may not be able to cope resulting in reputational damage New Risk Staffing and Culture All Potential industrial action taken against the council due to Government cuts, pay freeze & pension changes resulting impacting on service delivery Economic All Further reduction in funding from central government leads to more difficult efficiencies having to be found or the cessation of some services, with a loss of expertise and operational capacity from the council. New Risk