Encouraging innovation and well
managed risk taking
18. In a mature risk culture which encourages innovation
and well managed risk, it is recognised that when risks are taken
projects will not always succeed.[66]
If departments are too cautious and risk averse they are unlikely
to act on opportunities to move forward and improve services.[67]
Just one quarter of departments in the NAO's survey, however,
consider they know how much risk they can take to achieve objectives.[68]
A department with well managed risks will have formed a view about
its risk appetite, in terms of its willingness and preparedness
to take risks and where it should be more risk averse. For example
a department may be prepared to take more risks in new policy
initiatives, whilst it may need to monitor closely or minimise
risks being taken in essential service delivery or corporate governance.[69]
19. The performance partnership which is now reached
with heads of departments sets down their major objectives, public
service agreements, and incentives for them to perform.[70]
Although three quarters of departments in the NAO's survey said
they supported innovation to achieve objectives and two thirds
said they supported well managed risk taking, just 20% considered
they rewarded well managed risk taking. Despite support for the
concept, therefore, in practice there is a perception that there
is little incentive for civil service managers to take well managed
risks.[71]
Securing improved performance
from better risk management
20. By April 2004, the main perceived impact of the
Risk Programme amongst risk improvement managers in departments
had been in helping them put in place procedures, systems, policies
and strategies, and engaging senior managers.[72]
Reliance on processes at the expense of good judgement can however
create an environment in which staff see risk management as a
bureaucratic burden. Emphasis on processes and procedures may
even encourage them to be more risk averse.[73]
21. To maintain the momentum generated by the Risk
Improvement Programmes, more progress is needed to embed risk
management in the day to day activities of departments. While
three quarters of departments have implemented risk strategies
in key areas, these are not always sufficiently well developed
or understood by staff.[74]
Departments 'living the risks' in the everyday thoughts and actions
of staff are more likely to embrace a culture which encourages
well managed risk taking.[75]
Such departments will regularly review the risks they face,[76]
whether external events and developments, risks arising from operations
such as projects not being delivered on time and budget, or risks
arising from changes and new ways of doing things, such as the
introduction of new policies. They will also assess their preparedness
and capabilities to manage the risks, deploying the right resources
to manage actively the risks[77]
and communicating support for risk management to staff.[78]
64 C&AG's Report, para 1.9 Back
65
Q 112 Back
66
C&AG's Report, para 25 Back
67
Q 14 Back
68
C&AG's Report, para 19 Back
69
ibid, para 26 (ii) Back
70
Q 82 Back
71
C&AG's Report, para 2.24; Q 82 Back
72
C&AG's Report, Figure 12; Q 81 Back
73
C&AG's Report, para 1.10; Q 110 Back
74
C&AG's Report, para 21 Back
75
Q 110 Back
76
Q 2 Back
77
Q 112 Back
78
C&AG's Report, para 25 Back
