Statement of Intent 2006 - Managing opportunities and risks
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Risk management is an integral part of all our operations, from setting priorities through to achieving goals and milestones. We are committed to ensuring that each group manages risks as an integral part of its management responsibilities.
Our risk management programme ensures that, as part of standard management practice, we identify, evaluate, address, and monitor all risks. A risk is the chance that an event will do one or more of the following:
- adversely impact on the achievement of our objectives
- lead to a marked deterioration in operational performance
- cause significant financial loss to the Crown
- substantially undermine ministerial, government or public confidence in the Ministry.
Our risk management approach involves the systematic application of management policies, procedures and practices to identify, analyse, evaluate, manage and monitor risks. The objective is to reduce the likelihood and consequences of risk and to ensure risks that do materialise are effectively managed. Most risks cannot be eliminated altogether, but can be managed and reduced to a point where further effort is not required or justified.
With delivery of services that directly affect over a million New Zealanders, our work is important to many in the community and is always under intense media, political and public scrutiny.
The nature of our business inherently carries substantial risk, and the delivery of benefits and payments requires us to manage significant financial, physical and people resources. We invest considerable effort in managing risk to reduce the likelihood of failure, error or disruption and to minimise the harm that would arise should any of these occur.
Risk management within the Ministry is linked to our planning framework.
- Our Statement of Intent looks out over three years and beyond and describes the social development outcomes we want to achieve for all New Zealanders. Risks identified here have a strategic external focus. Managing them requires collaboration with other government agencies, non-government organisations and community groups.
- Our Annual Plan covers the results that we intend to achieve during the next twelve months. Managing risks at this level is focused on our performance. Managing these risks involves balancing of resources to strengthen our capability in the longer term with the need for sustaining and growing our capacity in the shorter term.
How we are managing our risk
We are evolving from a risk approach based on compliance and control to one that is more inclusive. Success is achieved when all staff are risk-smart and can identify and address risks that may impact on their work area and the overall achievement of the Ministry’s outcomes. We continue to support our risk identification process with robust internal and external audits to ensure we have the right checks and balances in place.
Each business unit takes responsibility for managing its own risks. It is expected that staff at all levels will routinely manage and report risk. It is expected that risks will be escalated as appropriate.
Across the Ministry we use a range of tools to identify, assess, treat and review risks. Emphasis is placed on communication and consultation to exchange information and ideas and to promote risk-based discussion. Combining effective tools with our staff’s risk-reporting skills ensures that we develop a strong risk management culture.
Over the next year we will transition from the present Ministry’s top ten risks to a quarterly review of what our strategic risks are. This will be achieved through engagement with the Leadership Team and the Ministry’s Audit Committee based on the risks that are being identified and managed in the business units.
The Ministry’s present top ten risks include:
- our critical systems fail us
- we don’t deliver to our stakeholders
- we can’t attract and retain the right people
- people are not safe
- stakeholders lose confidence in us
- poor financial management
- our strategies are not future-proofed
- we lose focus on our purpose
- we are not prepared for civil emergencies
- we don’t comply with legislation.
This approach will ensure that risk management continues to be an integral part of our everyday work and that our strategic risks are continually updated to reflect the environment in which we are operating.
How We Monitor Risk
Risks are reviewed monthly by business units and significant matters are escalated as appropriate. On a quarterly basis the Leadership Team reviews strategic risks. These reviews provide information to feed into decision-making processes, and provide assurance that key risk areas are being managed effectively throughout the organisation.
Regular stock-takes monitor and assess the ongoing effectiveness of risk management processes within the Ministry.
How We Provide Assurance Across Services Delivered Regionally
We have established a Regional Assurance function to support social development and give assurance across the Ministry’s services at a regional level. This includes:
- The development and agreement of work programmes covering key areas of risk to the Ministry’s regional operations.
- Active and timely assurance activities carried out to mitigate emerging issues.
How We Run Our Audit Programme
Part of keeping the Ministry safe is running an effective, internal audit process. Our audit programme is an integral part of our accountability framework. It meets the requirements of Government policy and the expectations on how government agencies conduct their business.
All audits are designed to ensure we have:
- reliability and integrity of information
- compliance with policies, procedures, plans and regulations
- safeguards for our assets and property
- economical and efficient use of resources
- alignment to the Ministry’s key strategic risks
- achieved our objectives and deliverables.
We undertake four kinds of audits:
- Core audits cover infrastructure activities, business support systems, processes and controls and the operational activities of service delivery groups. These audits are done constantly and provide a continual flow of information about risks, the effectiveness of controls, and the control environment.
- Risk-based audits cover issues that are actively identified through our risk management approach. Consequently, these audits tend to focus more on current and emerging issues and cover a wide range of subject areas.
- Follow-up audits establish what progress has been made in implementing suggestions and recommendations agreed to in both internal and external audit reports.
- Non-programmed audits respond to requests for assistance and usually cover inquiries, investigations and advice sought by managers. They frequently resolve issues and concerns before they escalate into serious concerns and risks. Experience indicates that non-programmed audits will require up to 30-40% of audit resources.
We retain the ability to maintain a flexible, current and timely programme of audits by meeting quarterly with the Leadership Team and the Ministry’s Audit Committee. This enables high level visibility and focus, ensuring that audit scheduling is aligned to agreed risk areas that are relevant to the current operating environment.
