Management of Risk, Principles and Reporting

Introduction:

The processes shall be structured to include ‘timely, accurate and useful risk reporting to enhance the quality of decision-making and support management and oversight bodies in meeting their responsibilities’. Risk reporting is a key component of the risk management framework, providing insight and confidence to both internal and external stakeholders. Good risk reporting offers an integrated perspective, which draws on and complements planning and performance frameworks and insights in assuring the effectiveness of the risk management approach, and highlighting areas where intervention is required.

Balanced Assessment:

The regular reports to the board should provide a balanced assessment of the principal risks and the effectiveness of risk management. The accounting officer, supported by the Audit and Risk Assurance Committee, should monitor the quality of the information they receive and ensure that it is sufficient to allow effective decision-making.

Prioritizing resource allocation:

This guidance outlines principles and key considerations for organizations to apply when designing and developing risk reports. The principles detailed in this guide are based on best practice developed and refined within the Civil Service risk management community. It is intended for both risk professionals and senior leaders responsible for managing risks and prioritizing resource allocation.

Guidance for effective reporting:

The purpose of this advice is to facilitate the efficient reporting of both emergent and major risks within the framework of enterprise risk management. It ought to be taken into account in conjunction with other related best practices.

Effective Risk Management Practices:

The construction of efficient risk management procedures, which enable transparent communication and information exchanges, is the foundation for an organization’s risk framework, which complies with regulations requiring accurate, timely, and insightful risk reporting.

Enhancing the Decision Making:

Organizations should recognize that risk reporting will best enhance decision making when;

1.  Objective, priorities and delivery outcomes are clearly understood across the organization.

2. Effective partnership working arrangements are in place between departments, arm’s length bodies and other delivery bodies.

3. Risk identification processes are in place to capture new and emerging risks

4. Risk management is an integral element of day-to-day activities underpinned by good governance and leadership.

5. Risk management is conducted as a collaborative process integrated with other key governance and oversight mechanisms, including but not limited to planning and performance processes.

6. Risk management reporting is considered through formal governance mechanisms on a regular basis.

7. Robust risk analysis takes place to ensure risk causes and consequences are properly understood, and control activity is directed effectively.

8. The organization has set and understands its risk appetite.

9. The risk culture embraces openness and clear communication, supports transparency, welcomes constructive challenge and promotes collaboration, consultation and co-operation.

10. There are processes in place to enable the aggregation and escalation of risks to the appropriate management level.

Complexity and needs of their organization:

When developing a risk reporting approach, principal risk reporting, risk professionals should adapt this guidance as required in response to the size, complexity and needs of their organization. Other factors to consider include the phasing and interconnectivity of governance arrangements, the operating environment, stakeholder needs and organizational culture.