A Risk-Wise Culture

Categories:
Thought Leadership

Kellie Beirne, Director CCR City Deal

 

I’ve always been of the view that a more efficient and effective public sector relies upon not sticking to the practices that achieve little impact but keep us safe – but pushing for the kind of innovative practices that make things work better for the communities we serve. All organisations whether in the public, private or community sectors need people to understand and take measured and considered risks. If everyone was to conform to practices that don’t really work or make a difference but keep us safe and refuse to take risk – then progress would be very unlikely.

Ensuring the CCR has a sustainable and resilient future, depends upon making progress. This is not just because the region is considered to be ‘lagging’ on many indices of competitiveness and productivity, but because the incidence of poverty and inequality remains too high and the gap between the most and least prosperous places, still too wide. CCR runs a £500M open investment fund through its City Deal programme. This is open to all – provided there is fit with our objectives, aims and investment framework. This sees the role of the public bodies behind CCR as one of market shapers and co-investors, seeking risk for reward and convening around some of the big societal and economic challenges of the day. Reward in this context means economic impact and shared prosperity and as such risk-taking comes with a significant responsibility.

The responsibility bit isn’t always easy or straightforward. If things go wrong and despite comprehensive safeguards in the world, there will be occasions when it happens, it is right that people are held to account in appropriate ways. However, the merciless blame and hostility that can often accompany this, can feel wholly disproportionate to good faith endeavours. It’s no wonder there’s sometimes an aversion to any kind of risk at all. We think though, the better way to see risk, is as something that needs to be constantly understood and managed.

Our new Enterprise Risk Management Policy sits alongside our Investment Framework and helps make sense of our risk environment by establishing the context, identifying and analysing risk, evaluating risk and finally, responding to risk. It helps to establish the tone of our approach and set out structures and systems that recognise the environment in which risk operates. As an economic development programme, our risks are different to partner local authorities which manage services ranging from public health to education and social care. Nonetheless our risk environment is a significant one wherein hard evidence, due diligence, appraisals, data and analysis all have to sit alongside sound judgement.

Our approach has been thus to:

  • Be clear about our ‘red lines’ and tolerance thresholds for different types of activity
  • Staying true to our purpose and ensuring investments and the process leading up to those investments mirror not just our vision and objectives – but uphold our values and ideals
  • Speak to a risk-wise culture – in which we manage risk through the whole life of a project and programme and ensure risk is proportionate to both reward and responsibility
  • Establish key lines of defence through utilising our project leads to own risk, our investment panel and programme board to oversee risk, audit to bring independence to the risk process and Regional Cabinet to ultimately approve projects
  • Demonstrate good governance through a system of networked bodies, committees and scrutiny
  • Practice responsible investment – placing a focus on ESG, Equality, Diversity and Inclusion and ongoing work to develop local impact policies for recycling funds, support for Real Living Wage and Fair Work.
  • Develop carbon literacy through the risk process – this is an ongoing programme to be embedded through our revised investment strategy and ensuring net zero objectives are enshrined in risk assessments
  • Drill the legal and financial risks through our specialist advisory teams and robust due diligence
  • Be focussed on the constant adaptation of the macro-risk environment

 

Culture can either support or limit innovation and advancements. Handling failure is part of this and whilst I am on record as saying, often the biggest failure of all is failure by omission, that doesn’t mean we should simplistically embrace failure associated with doing, either. Most successes have encountered problems and challenges along the way – what made them ultimately successful was adaptation, changing course, contingency planning and persistence. Managing risk intelligently and with integrity requires a cultural approach to risk and that is why we take being risk-aware, seriously.

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