Business risk management team update

Report: 11
Date: 7 December 2007
By: the Treasurer and Commissioner

Summary

A report on progress made by the MPS in the areas of corporate governance, business risk management and insurance management.

A. Recommendation

That

1. members note progress to end October 2007 on corporate governance, business risk management, and insurance management; and

2. note progress as captured by the Audit Commission / ALARM [1] risk management Key Performance Indicator.

B. Supporting information

1. This paper includes a report on activity since the previous update report (Appendix 1) and an update on progress made in relation to compliance with the Audit Commission / ALARM KPI as at end October 2007 (Appendix 2).

Corporate governance

2. Interim guidance for police authorities and forces on deploying the CIPFA / SOLACE governance framework has now been published.

3. A detailed report by the Director of Strategic Finance on MPS financial control and management of corporate governance is to be considered by this Committee. The report summarises progress in relation to the CIPFA / SOLACE analysis, Scheme of Delegation, Consolidated Action Plan, Audit and Inspection, Capital and revenue budget and business planning and cross refers to business risk management. The report proposes that the MPS corporate governance workstreams be monitored though a Corporate Governance Coordinating Group, chaired by the Director of Strategic Finance, with the Directors of Strategy and Risk Management as members.

4. The CIPFA / SOLACE governance framework incorporates a requirement for a ‘local code’ of corporate governance. The MPS corporate governance framework will evolve to form the basis of our local code. This will be a key deliverable of the project to be led by the MPS Corporate Governance Coordinating Group.

5. The framework also requires an annual statement on governance to replace (and subsume) the existing statement on internal control. The framework states that the MPS/MPA approach whereby a statement signed by the Commissioner informs a published statement signed by the Chair and Chief Executive of the Authority “encapsulates more clearly the concept of the authority holding the chief officer to account for the actions of the force”. As the two-tier MPS/MPA approach is now recognised as being best practice it is clearly appropriate to maintain it.

6. Section 5 of the governance framework sets out specific guidance on business risk management. This guidance substantially reflects the detailed drafting proposals made by the ALARM Policing Sector Group. The existing MPS business risk management framework complies with the Section 5 guidance.

7. The Director of Strategic Finance has been given lead responsibility for corporate governance and will submit future reports to the Authority. Such reports will include work undertaken in this area by the Strategy Unit.

MPS business risk management maturity progress including progress on corporate risk management

8. The Corporate Risk Review Group (CRRG) continues to develop into its role well. CRRG has now met eight times since it was inaugurated in November 2006 and has led some key developments. As stated previously in this report, new governance arrangements and standard operating procedures for business risks - based on the bowtie tool - have been approved. The ‘top 10’ corporate business risks approved by Management Board remain under review by CRRG. Emerging risks are considered monthly. Monthly corporate risk reports, based on discussion at CRRG, are now a standard feature of the MPS corporate business risk management framework. Business risk is a major contributor to the Corporate Strategic Assessment.

9. In view of the good progress being made, it can again be reported that we remain on course to achieve Level 5 business risk management maturity by the end of the current financial year. This level is very much a minimum standard on which we can build for the future. Moving to the next and final level of the maturity model presents a further challenge for the MPS.

Corporate Risk Register

10. We reported earlier that a thorough review of the format of the Corporate Risk Register[2] will be undertaken after approval of the governance arrangements and SOP for corporate business risks. As these arrangements were approved at September’s Corporate Risk Review Group (CRRG) meeting the Director of Risk Management will now commence a review of the full set of corporate business risks in conjunction with the Business Groups, aiming to report to December CRRG and March 2008 Corporate Governance Committee.

Audit Commission / Alarm Key Performance Indicator

11. An update to the Audit Commission / ALARM Key Performance Indicator (KPI) at end October 2007 is at Appendix 2. There is a need to refresh the KPI. The Director of Risk Management will raise the matter at the next meeting of the ALARM Board (15 November 2007), suggesting that a sub-group be set up to refresh the existing KPI, and volunteering to lead the group.

Insurance management

12. The insurance programme continues to mature to reflect the risk exposure of the MPS/MPA. (See sections 9 to 14 of Appendix 1 for an activity update).

13. The insurance policy portfolio was successfully renewed on 1 October 2007. Substantial cost savings were achieved in addition to enhancements in policy coverage. The savings are being used to build up self-insurance funds.

C. Race and equality impact

The MPS business risk management process requires diversity risks and impacts to be identified and managed, enhancing the ability of the MPS to respond to the diversity imperative.

D. Financial implications

All work undertaken by BRMT is funded from existing budgets. Interventions to reduce risk exposures identified as a result of the deployment of the business risk management process may have financial implications.

E. Background papers

None

F. Contact details

Report author: Nick Chown, Director of Risk Management, MPS

For information contact:

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

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