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Public sector, risk management

By TIS Holdings
Johannesburg, 16 Feb 2011

The South African public sector industry is transforming at a rapid rate and this increases the exposure to elements of risks and opportunities that may impair/promote the achievement its objectives.

Risk management is the focus of reducing, minimising and controlling the probability and input of a negative occurrence; and/or increasing the probability and impact of a positive occurrence.

There are various methods of risk management - some of these methods include the same practice approaches, concepts and tools used in a classic risk management process.

Our TIS Holdings experts have accumulated specific knowledge and expertise in the public sector industry, which is an essential key driver for a successful implementation of risk management in the public sector using specific tools like Barn Owl & QPR Risk Management.

1. Policy, monitoring and evaluation

Government need to take decisions based on policy and procedural activities. Government officials are expected to understand the current day situation, the potential needs and evolutions, the agenda's of all stakeholders. It is recommended that officers who are responsible for managing projects should minimise risk factors by first understanding the concept of the risk management process. A risk and vulnerability analysis should be prepared along with poverty assessment surveys to identify the probability and impact of the risks.

Recommendation:

TIS Holdings has a team of policy advisors experienced in the preparation as well as the evaluation of policies and procedures. Our teams specialise in evaluation of methodologies on the one hand and in specific key performance areas such as healthcare, finances, defence and security, and innovation on the other hand.

2. Regulatory impact to our society

Those charged with governance are expected to act in the interest of their political stakeholders and identify, evaluate and respond to the entities' risks - encompassing risks relating to compliance with laws, regulations and financial reporting. Stakeholders expect those charged with governance of an entity to manage strategic and environmental risks and to put controls in place to deal with such risks.

Our advice:

TIS Holdings has a team of high profiles able to elaborate effective and efficient solutions with impact and adapted for a complex, flexible and ever changing society.

3. Good governance and information risk

Lately, it appears that the public sector approach to managing risk is materiality, and probably just a time to meet the challenges of shared services.

The information risk is no longer solely the responsibility of a security manager in IT. But the benefits of building information risk manager into the routine operating processes of each department or entity will pay real dividends by ensuring that the control frameworks as detailed by national treasury will act as an enabler rather than an obstacle.

Advisory on governance and internal audit:

Our team developed a multidisciplinary methodology to scan the level of good governance of the public sector. Based on our best practice models, we can elaborate adapted governance models on the strategic level as well as on the operational level.

TIS Holdings has a team of experts implanting internal audits within the public sector environment.

Key to a successful working relationship will be the selection of a partner that understands the culture of the people and the department, or departments, and work with the relevant officials and decision-makers.

The integrated risk management framework delivers on the commitment set out by national treasury risk management framework to strengthen risk management practice within the public service.

The national treasury risk management framework advances the development and implementation of modern management practices and support innovation throughout the public service. It promotes a wholesome approach to better integrated risk management into strategic decision-making.

TIS Holdings helps public entities apply the framework to strengthen management practice, decision-making and prioritise setting to better respond to community needs; thereby:

* Support the government's governance responsibilities.
By ensuring that significant risk areas associated with polices, plans, progress and operations are identified and assessed and that appropriate measures are in place to address unfavourable inputs and to benefit from opportunities.

* Improve results
* Strengthen accountability
* Enhance stewardship

By strengthening public service capability to safeguard people, government property and Internet.

Integrated risk management requires an ongoing assessment of potential risks for an organisation at every level, and then aggregating the results at the corporate level to facilitate priority setting and improved decision-making.

Integrating risk management into decision-making

While each organisation will find its own way to integrate risk management into existing decision-making strategies, the following tailor might require some attention:

* Introducing risk management components into existing strategic planning and operational processes;
* Communicating corporate direction on acceptable level of risk; and
* Improving control and accountability systems and processes to take into account risk management and results.

Conclusion

Finally, one of the greatest challenges to public sector risk management is the nature of organisational leadership. Elected officials typically have a limited tenure and spend much of that time educating themselves about the nature of risk they face.

It is important that senior management and politicians are made aware of the opportunity cost of not managing risk.

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Editorial contacts

Donn'e Madden
TIS Holdings
donnem@tisholdings.co.za