Headlines: August 17th, 2000

A new report backs the argument that properly planned and managed risk-taking in the public sector can promote innovation and lead to improved value for money for taxpayers. By September 2000, all Government departments must set out how they are going to handle the risks for which they are responsible, and the new report, from the National Audit Office (NAO) aims to help them prepare.The report, Supporting Innovation: Risk Management in Government Departments, draws on an NAO survey of 257 government departments, agencies and non-departmental public bodies. 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. It also highlights the progress made in the development of guidance on risk management strategies and frameworks, particularly by HM Treasury and the Cabinet Office.

Among the findings are that 82 per cent of respondents in the survey agreed that risk management was important to the achievement of their objectives, although few had risk management objectives or policies. Worryingly, only a third said that regular risk reports were an effective component of managing risks in their department. The report identifies some of the reasons for risk aversity (organisation culture, lack of expertise, 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 survey’s respondents identified new risks arising from new ways of working, although just 13 per cent said that they knew the detail of the risk management systems of other organisations they work with. The NAO survey and other aspects of the study were conducted with the assistance of PricewaterhouseCoopers. The questionnaire and a summary of the responses can be viewed at www.nao.gov.uk