To consider the report.

The Panel considered whether there was adequate risk management in place for RBWM as part of its governance arrangements. The Insurance and Risk Manager explained that the aim of risk monitoring was to ensure better business decisions, taking risks into account. Taking uncertainty into account was not a natural thing to do therefore good risk-based decision making tools were needed.

Previously Members had received lengthy documents. Following feedback this had been reduced to a heat map attached as an appendix. Members noted that the register was materially the same as the 2016/17. One risk relating to financing was highlighted to Members.

The register was expected to be completely refreshed in the next few months in conjunction with the Senior Leadership Team. The previous approach was to have key operational risks, key strategic risks, and all others.  One rating for likelihood and one for impact was not necessarily helpful as it just concentrated on those two dimensions. In the last five years all decision making reports had included a section on risk management including mitigations.

The Chairman asked how the council ensured risks were identified. The Insurance and Risk Manager explained that the content of the risk register was extracted from discussions at CMT and DMT level. As the council had transformed, the statutory responsibilities had remained. The risk register needed to be refreshed because of the change in service model delivery. Officers were responsible for articulating risks, which were then collated in the overall register.

Councillor E. Wilson raised three areas of concern in relation to Key Strategic risks:

·         CMT0039 – was this the responsibility of the council? If so, what was the council going to do about it?

·         HPLAND0013 - Was the risk correctly articulated in relation to regeneration?

·         HOF0006 - Should income volatility be included as well as expenditure volatility?

Councillor Saunders commented that he appreciated the concern of Cllr E. Wilson about the amount of influence the council could have, particularly in relation to CMT0039, but he felt the council had an appropriate role in terms of preventing an occurrence or responding to one. If the Managing Director was asked to name the strategic risks, although the terminology may differ, he suspected the three identified by Cllr E. Wilson would be on the list.

Councillor E. Wilson referred to outsourcing of services and the Borough Local Plan as key risks. The Insurance and Risk Manager commented that the Borough Local Plan was included as an operational risk; the document before Members was a summary. Councillor Saunders commented that it would be hard to identify another strategic risk beyond the seven already on the list. He suggested that operational risks such as delivery of the Borough Local Plan and the effective delivery of services with external partners, could be submitted to relevant Overview and Scrutiny Panels on a 6 month basis.  The relevant officers and Lead Members could therefore attend to answer questions. It was the role of the Audit and Performance Review Panel to scrutinise the process.

Councillor Da Costa welcomed the split between strategic and operational risks, by directorate, for each Overview and Scrutiny Panel. He questioned what could impair the quality of decision making as referred to in paragraph 11.3 of the report. The Insurance and Risk Manager commented that it was important not to underestimate risks in terms of likelihood or proximity. Councillor Saunders highlighted the importance of assessing a risk in the uncontrolled scenario and then residual risk once mitigation was in place.

It was confirmed that the Head of Finance decided whether a risk was reported in the full budget. Councillor E. Wilson commented that he was not aware of any reference to crime and disorder near the Windsor barracks in the budget. Councillor Saunders responded that the allocation of resources would be focussed on  usable or liquid reserves to respond to any situation in the expectation that there would be no external help. If an incident did occur outside the barracks, he would expect national government would provide resources.

Councillor E. Wilson commented that there were a number of financial risks related to the Borough Local Plan including judicial reviews, developer actions and the national government stepping in. Residents would not see this in the budget. He suggested the risks discussed should be rethought. In relation to the Borough Local Plan he felt it was not completion that was the risk but the timing of expenditure and receipts. The wording of the volatility risk should be ‘financial’ rather than specifying expenditure. He felt that the risk related to crime and disorder should be an operational rather than a strategic risk. He suggested the relevant risks should be brought to Overview and Scrutiny Panels and linked to the budget.  Councillor Saunders stated that he would raise the issue with Cabinet colleagues and lead officers. He would reflect on what had been discussed at the meeting to see if the linkage and logic could be made clearer and accountability be improved.

Councillor Da Costa asked for the implications of options of key decisions to also be addressed. The Insurance and Risk Manager commented that previously he would look at all reports in terms of identifying risks, but following training, report authors were now responsible for this element, using the risk register and tools. Councillor Da Costa offered to discuss specific suggestions for improvement with the Insurance and Risk Manager.

Councillor E. Wilson requested that for the next Panel meeting, the strategic risks be re-worked and an appendix to the budget be added.

RESOLVED UNANIMOUSLY: That the Audit and Performance Review Panel requests:

i)             The Lead Member for Finance in conjunction with the Head of Finance and Insurance and Risk Manager, and in consultation with relevant Lead Members, to review and update the risk register to reflect the issues discussed at the Panel meeting and provide more comprehensive linkage and transparency, particularly to the annual budget commentary.

ii)            The Lead Member for Finance to bring to the attention of Lead Members and lead officers at a future Cabinet Briefing the opportunity for Overview and Scrutiny Panels to be presented, at an appropriate cycle, information in relation to key operational risks in each of their respective areas as identified by Lead Members, lead officers and Overview and Scrutiny Members.

In relation to the earlier discussion about the Pension Fund statement of accounts, Councillor Saunders commented that if discussions needed to go beyond the council’s role as the administrator of the fund and make judgements, this should be addressed elsewhere. The Head of Finance agreed to look into the issue of an appropriate forum for such discussions.