Risk Management

Risk Management is a key driver of Legal Compliance Project and website. This section explores:

Risk Management Definition
Background of risk management in the Public Sector
Standards Issued on Risk Management,
What Does the Handbook Say About Legal Compliance Risks?
The Relationship Between SOLGM Legal Compliance Project and Risk Management

Refer below to read more...

1. Risk Management Definition

Risk Management is defined as the systematic application of management policies, procedures and
practices to the tasks of identifying, analysing, treating and monitoring those risks which impact on
an organisations objectives. In local government the definition has been extended by substituting "risks
that impact on an organisation's objectives" to "risks that could prevent a local authority from achieving
its strategic or operational objectives or Plans or from complying with its legal obligations".

2. The Background to Risk Management in the Public Sector

In the New Zealand public sector, a major catalyst for systematic risk management was the Cave Creek
tragedy in 1995. Until then risk management had typically been a piecemeal process in specific activities
with little connection between them. There was no central theme to the way risk management was approached.
Soon after the Cave Creek tragedy, the State Services Commission outlined expectations required of Chief
Executives of government departments. These expectations aim to seek reasonable assurance that risk
management is well integrated and fully operational in departments. In local government integrated risk
management has been slower to emerge. However the publication of risk management standards specifically
aimed at local government has given increased impetus to risk management activities.

3. Standards Issued on Risk Management

In 1995 Standards New Zealand issued AS/NZS 4360: Risk Management. This Australasian standard
sets out the generic framework for the risk management process. In 2000, Standards New Zealand published
a handbook for risk management in local government. The handbook provides guidelines that can be applied
specifically by Councils to meet their obligations. The handbook divides Council activities into seven broad
categories:

Governance;
Legal Compliance;
Business Risks;
Built Assets;
Human Resources;
Information Systems;
Financial Risk Management.

The handbook also suggests organisational structures to implement and co-ordinate risk management in
a local authority.

4. What Does the Handbook Say About Legal Compliance Risks?

Potential risks identified in the handbook regarding legal compliance include failing to:

Comply with the law - both common law duties and statute law;
Carry out duties or provide services as required by legislation;
Provide correct or sufficient information and advice upon request;
Assess changes in practice or implementation of new innovations;
Recognise the implications of case law.

The handbook outlines the importance of ongoing identification of compliance issues through:

Means of identifying new or amended legislation of significance;
Means of identifying the sections that pose a significant compliance risk;
Means of identifying new or amended case law;
Means of identifying appropriate procedures for securing compliance;
Training of managers and supervisors in their legal responsibilities.

5. The Relationship Between SOLGM Legal Compliance Project and Risk Management

As noted legal compliance is an important element of a local authority's risk management. The approach
to legal compliance should be consistent with the process outlined in standard AS/NZS 4360. In SOLGM's legal
compliance methodology, the approach taken is consistent with this standard. While the SOLGM Legal Compliance
project provides good practice guidance to avoid and mitigate risks, it is up to each Council to establish their
own tailored approach to risk management. This will include identification of specific risks applicable
to each Council.