Corporate risk update

Report: 10
Date: 05 December 2005
By: Treasurer and Commissioner

Summary

This report details progress made by the MPS Corporate Risk team in the areas where it provides a professional lead for the Service: corporate governance, business risk management, and insurance management. The refreshed MPA and MPS corporate risk register are also presented.

A. Recommendation

That

1. members note progress up to the end of the third quarter of 2005/06; and
2. approve the refreshed MPA MPS Corporate Risk Register and to approve in principle the draft MPS risk Register.

B. Supporting information

1. This report includes a report on activity by the Corporate Risk Team since the previous update report (Appendix 1) and the refreshed MPS Corporate Risk Register (Appendix 2 (exempt)) and MPA Corporate Risk Register (Appendix 3).

2. By the very nature of operational policing the external publication of MPS business risks could potentially expose the Service to significant risk and would inevitably damage the risk management process itself as risk registers would be sanitised. It is therefore MPS practice to place all business risk registers in its Freedom of Information Act Non-Disclosure Log. This is consistent with the Association of Chief Police Officers (ACPO) position on the disclosure of risk registers, which is to omit them from the list of document types that may be published by forces without reference to ACPO. The MPS Corporate Risk Register is therefore treated as an exempt item.

3. Management Board considered the refreshed MPS Corporate Risk Register on 2 November 2005 following which the Director of Risk Management has been requested to review the process for maintaining the risk register. For the time being therefore the register remains in draft pending agreement to the risks and to the process for future register refreshes. The MPA Senior Management Team agreed the refreshed MPA risk register on 21 November and agreed a work programme for review during 2006/07.

4. Mainstreaming business risk management is a medium to long term task. As the previous Corporate Risk Team update included an update on progress made in relation to compliance with the Audit Commission/ALARM risk management KPI as at end September 2005, and this latest update paper reflects the position as at 14 November 2005, only six weeks after the last KPI update, the next KPI update will be submitted to the March 2006 meeting.

C. Race and equality impact

There are no adverse impacts on race and equality, however, the risk management process requires diversity risks and impacts to be identified enhancing the Service’s ability to respond to the diversity imperative.

D. Financial implications

All work is being undertaken from existing budgets.

E. Background papers

None

F. Contact details

Report author: Nick Chown, Director of Risk Management, MPS and Ken Hunt, Treasurer, MPA.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1

Progress report - October 2005

This report covers the three areas where the Corporate Risk Team currently provides the Service with a professional lead together with a section on the Outsourcing Programme, where support is provided in relation to risk management and insurance, and a further section on the development of national standards for policing risk management.

Business risk management

1. Statement on Internal Control - The Corporate Risk Team is currently collating details of progress made in relation to the internal control issues identified in the 2004/05 Statement on Internal Control and, although we have no reason to believe that good progress is not being made in all identified areas, will take action as may be necessary to ensure that satisfactory progress is reported in the next Statement. It is now time to consider the process for preparing the 2005/06 Statement. This is a key task for the Assistant Director of Risk Management, Gordon Mitchell. He is presently reviewing the lessons learned from the development of the 2004/05 Statement and will make proposals for the 2005/06 process to the MPS Corporate Governance Strategic Committee on 22 December 2005. Proposals are being developed for a programme of risk and control assurance activity linked to the ‘key control areas’ identified and referred to in the 2004/05 Statement. The 2005/06 Statement process will be aligned to the MPS planning process.

2. (B)OCU and Business Group risk registers – A significant number of risk registers have now been developed at (B)OCU and Business Group level to complement the existing Corporate Risk Register. However, as stated previously, much work is still needed to ensure that all OCUs and departments are engaged with the risk register process and to that end the Head of Business Risk Management, Supt Alan King, and the Senior Business Risk Adviser, Jo Collins, are jointly developing an extensive programme of visits to command team and SMT members across the Service. The Director of Risk Management has written personally to all members of Management Board, all Business Group Business Managers, all OCU commanders, and all heads of department advising that his team will be visiting each and every OCU and department in the coming months to quality assure both the risk registers and the underlying process used by each OCU / department to develop their risk register. The forthcoming risk register refresh will form part of the MPS planning process.

3. Corporate Risk Register - The Corporate Risk Register has been refreshed in the light of the corporate strategy and Service Review findings and a report was submitted to Management Board in November. Management Board has requested that the “Corporate Risk Register methodology (is) to be revisited to ensure its relevance and agility”. The refreshed list of corporate risks is therefore provisional pending the outcome of the review of the methodology. The intention is for a report on the review of the corporate risk register methodology to be submitted to Management Board in early 2006 with MPA Corporate Governance Committee to be updated on progress at its March 2006 meeting. It is intended that the agreed quarterly corporate risk reporting process will commence in April 2006.

4. NIM and business risk – Corporate Risk continue to work with the Interim Head of Corporate Planning and other colleagues to embed business risk in planning. As the planning process evolves the risk management content evolves with it. A longer term objective is for the business risk registers and Statement on Internal Control (SIC) to become seamlessly deployed elements of an Integrated Planning Process.

5. Business risk management awareness/training rollout – The Corporate Risk team continue to deploy risk management training sessions. It has previously been reported that the addition of two risk professionals in support of the Director has enabled the team to bring in-house training previously delivered by an external provider. The non-renewal of the external training contract in October 2005 has led to a substantial annual cost saving. The Corporate Risk Team has successfully delivered two training sessions since the external training contract was discontinued. Feedback from attendees over both courses suggests that there has been a significant increase in the overall quality of the training delivery. Other training and awareness sessions have been developed to cover specific needs. In particular, the proposed inclusion of business risk competencies within the MPS deployment of the National Competency Framework must be adequately supported by training materials for officers and staff at all levels. This involves a ‘step change’ in risk management training delivery by the MPS and will require innovation to deploy what will be required from existing resource (staffing and budgets).

6. Business Risk Management Standard Operating Procedure – It was reported previously that the team were working on improvements to the current Standard Operating Procedure (SOP) in the light of lessons learned from the initial introduction of risk registers across the Service. The updated and enhanced SOP has now been finalised. A three page ‘Quick Guide’ to the development of risk registers has been produced in support of the SOP. An increasing number of organisations have an IT system to support their risk management process. The Director of Risk Management had secured budget to enable the MPS to develop and deploy such a system. In view of the benefits of adopting an integrated approach to automating the overall planning process of which the risk registers form a part it has been decided not to commence development of a standalone RMS but instead for the Corporate Risk Team to work with planning colleagues when the time comes to consider planning software. In the meantime, an MS Excel spreadsheet tool with macros to automate elements of the process of preparing a risk register, and with embedded context sensitive help, has been developed. The spreadsheet will make register preparation a lot easier and will simplify the review of risk registers at the corporate centre.

Insurance management

7. Personal insurance invalidation indemnity policy – Finance Committee approved the indemnity in December 2004 subject to a review after it had been in operation for 12 months. No problems have been experienced since the indemnity became operational. A report will be submitted to Finance Committee in January 2006 recommending that the policy be confirmed. The MPA policy and standard operating procedure has been shared with the other forces. There has been considerable interest in the approach. We have recently heard that the management board of the West Yorkshire force has approved the development of an indemnity, and we have received a letter of support from the Chief Constable of Greater Manchester Police.

It may be recalled that the MPA indemnity excludes ‘unaffordable events’ (events that involve mass claims that exceed the Authority’s self-insurance limits). This principle will apply to all other forces that introduce similar indemnities. The MPS is continuing to work with the London Fire Brigade, London Ambulance Service, British Transport Police, and City of London Police towards the submission of a request to Central Government for an indemnity in relation to events that are unaffordable to an individual police authority, brigade or ambulance service. To that end a draft submission has been shared with the interested parties. The MPS sponsor, DAC Peter Clarke, has written to (the President of) ACPO recommending that they:

• Write to all forces in England And Wales advocating the introduction of personal insurance indemnities on the MPA model;
• Write to the Ambulance Services Association and Chief Fire Officers Association requesting agreement to a joint request to Ministers for a Central Government indemnity in respect of ‘unaffordable events’.

In the meantime, a report on the matter by the Director of Risk Management has been submitted to the Office of the Deputy Prime Minister at their request.

8. Insurance programme renewal – The 2005 insurance programme was renewed with effect from 1 October 2005. With the exception of one policy, all insurances were renewed at existing terms, the premium increases only being due to the increased exposures (e.g. CBRN trained operatives, vehicle numbers etc.). The liability policies were renewed on the existing premium basis, this despite an increase in wage roll figures. A new three-year property long-term agreement was entered in to in order to optimise the benefits of existing rates (this despite a potentially large water damage claim at Jubilee House). The property insurers did however place some requirements on the MPS following knowledge of this water damage claim (see “Other Insurance Matters” below).

9. Business interruption insurance review – This project is still work in progress. An oversight meeting involving the Directorate of Resources, Corporate Risk Management and Willis took place recently. The necessary data is being compiled.

10. Self-insurance fund development – A draft report has been received from the external funding expert and is to be discussed with the relevant personnel including the MPA Treasurer and Deputy Treasurer. This meeting will review the estimated costs of liability claims (1999-2005) balanced against available reserves. The work undertaken by the funding expert on claims development factors (frequency and size) enhances the ability of the MPA to assess the adequacy of claims reserves.

11. Other insurance matters – A presentation was made to Property Services Department on the property insurance programme and claims handling procedures. Work continues on MPS claims allocation, ensuring that the property programme aligns with the MPA estate leasing arrangements, and on the implementation of the property insurers’ 2005 renewal requirements:

• Identification of top 20 locations in terms of total value of IT equipment at risk
• Ensuring a response to insurers’ survey requirements within 90 days.

Outsourcing Programme Support (risk management and insurance)

12. Outsourcing programme – Corporate Risk Management continue to support the Outsourcing Programme with advice and guidance on risk and insurance matters, subcontracting specialist insurance work to Willis. This approach ensures that contracts and specifications include robust insurance provisions. The responsibility for the provision of advice and guidance on business continuity matters has moved to Central Operations along with the transfer of the Business Continuity Team.

Corporate governance

13. MPS Corporate Governance Strategic Committee Operating Framework – The Director of Risk Management has been tasked to develop an operating framework for the Corporate Governance Strategic Committee (CGSC), including consideration of the respective roles and responsibilities of the committee and the MPA Corporate Governance Committee (CGC). As a first step, a comparison and gap analysis of the following has been undertaken:

• Good Governance Standard for Public Services
• Statement on Internal Control for 2004/05
• MPS CGSC work programme

A first draft comparison/gap analysis document is being reviewed. Proposals will be made to the February 2006 meeting of CGSC. The March 2006 meeting of MPA CGC will be fully briefed on the development of the operating framework.

As a member of CGSC, the Director of Internal Audit will have the opportunity to ensure that the framework fully reflects the role of MPA CGC.

Development of national standards for policing risk management

14. ‘Closing the Gap’ risk management recommendation - In his report ‘Closing the Gap’ Her Majesty’s Inspector of Constabulary, Denis O’Connor, recommended that the MPS risk management model be considered, by the National Centre for Policing Excellence, for rolling out as a national standard for risk management in the forces that will emerge from the forthcoming reconfiguration of the police service in England and Wales. In his capacity as Chair of the Policing Sector Group of the National Forum for Risk Management in the Public Sector (ALARM), the Director of Risk Management has offered the services of the ALARM group to NCPE to develop a national standard based on the MPS model and good practice from other forces. The management consultancy PriceWaterhouseCoopers, who support a number of forces in the area of risk management, are assisting the ALARM Policing Sector Group on a pro bono basis with the scoping of a national standard. The scoping activity begins in earnest on 21 November with a workshop involving members of the ALARM group facilitated by PwC and MPS Corporate Risk Management.

15. Other work with National Centre for Policing Excellence - In the meantime, the NCPE have requested assistance from the MPS Corporate Risk Team in relation to the development of a national approach to managing risk in various areas where guidance is to be issued to the forces e.g. safer detention, and the management of police information. In each case the team has reviewed the draft guidance and submitted recommendations in relation to the risk content to NCPE.

Appendix 2

This appendix is exempt.

Appendix 3

Corporate risk register MPA

1. Ability to maintain good productive working relationships with the MPS
2. Ability to maintain good productive working relationships with the GLA and Mayor
3. Inadequate resources to deliver the corporate strategy
4. Potentially severe effects on service delivery resulting from closure of offices in an emergency situation
5. Possible threat to the Authority’s position resulting from the government’s reform agenda
6. Inability to raise the profile of the Authority
7. Possibility of lack of member ownership of the corporate strategy
8. Inability to develop officer and member skills and competence to match changing requirements
9. Failure to achieve defined corporate objectives
10. Potential for serious legal action

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