The UK Experience by Malcolm Morley*
Risk is often defined as an event that might occur in the future that might impact on the ability of an organisation to achieve its objectives. This is a perfectly reasonable definition, and a two by two matrix often goes with this definition to enable practitioners to identify risk in terms of likelihood of occurrence and impact.
This matrix gets managers to think about risks and the potential impact of them on the organisation. It is also a very useful tool to get managers to share perceptions and knowledge of risks and their evaluation of them. In this way the organisation’s risk register is more likely to be realistic and to contribute to the management/prevention of risks.
When evaluating risks the negative impact of the risk is often highlighted. This has to be balanced by the positives arising from doing things and effectively managing the risk associated with them.
The books written about risk management cover everything to do with managing current risks and evaluating the risk arising out of proposed initiatives/investments and actions. It is very difficult, however, to find anything about the risk of not doing things.
In stating, ‘not doing things’, I don’t mean not complying with the law or not ensuring that a safe system of work exists. I mean not doing things in a different way or not doing different things, and particularly, not innovating.
Perhaps Councils should ask themselves: What is the likelihood and impact of not doing something on the ability of the Council to achieve its objectives?
The real challenge in risk management is not to assess the risks of what is being done now but to identify the risk of what is not being done but which could transform the Council’s performance and the value added for the communities that it serves.
Crises and inadequate performance often arise because organisations fail to recognise what is not being done or what they could be doing to improve things. As an example, take the inspection of food premises. Food premises are risk rated and the frequency of inspection reflects the risk. Performance (and risk) is often measured by whether the frequency of inspection is met.
The owners/managers of the food businesses should be self regulating and protecting the public’s health. Are Councils that are merely inspecting premises effectively protecting the public’s health?
In this case Councils are not reducing the risk profile of the public through working with businesses to enable them to move to the lowest risk category. They are probably assessing the risk of not reaching a target number of inspections and not assessing the risk to the public.
The impact of the risk of not doing things will be felt by Council if it is consequently assessed as underperforming by the electorate and/or the regulator/Government.
Most importantly it will be felt by the consumers/communities served by the Council through needs not being met, the impact of risks being allowed to be realised through inaction/inappropriate focus for action and value for money not being improved.
*Malcolm Morley is Chief Executive of Harlow District Council and can be contacted via the Editor, email info@lgfocus.com.au The views expressed in
this article are not necessarily those of his employer.
