Headlines: November 23rd, 2001

The Ministry of Defence has been criticized by the National Audit Office for slow progress in developing risk management processes. In a new report ‘Major Projects 2001’ the NAO challenges the MoD to look at whether it is spending the right amount of time and money reducing risk. The MoD has not yet put in place comprehensive indicators to measure the success of risk assessment which the NAO believes is key to future successful acquisition. The report urges the MoD to give priority to establishing indicators.Although critical of the risk management processes, the NAO recognizes that progress has been made in reducing risks. Costs have decreased for the second year running. The major risk of project slippage has been reduced by over half compared to last year. The risk of failing to meet the requirements of military customers has been held steady with a 93% customer satisfaction rating.

The MoD, like other parts of the public sector is finding it difficult to embed risk management into the culture. The management of risk as a corporate issue emerged from the private sector in the Cadbury, Greenbury and Turnbull reports. The Audit Commission set out the principles in relation to local government in a management paper ‘Worth the risk – improving risk management in local government’. The Commission describes risk management as an integral part of good governance and includes a shared awareness and understanding of risks, monitoring and reporting risks and assessing the costs and benefits of risk controls.

Links: www.nao.gov.uk   <http://www.nao.gov.uk> www.audit-commission.gov.uk   <http://www.audit-commission.gov.uk>