Focus on governance and risk flyer

December 2015

Focus on Governance and Risk

The Board dilemma!

Once again we see in the news emerging around Kids Company, the pressures and perils that arise as a result of accepting a Non-Executive or Trustee appointment. The focus on ensuring that an effective process of governance is in place therefore continues.

One of the key responsibilities of the role, amongst many others, is to promote the success of the organisation and in doing so there is a fundamental need to both establish its mission and corporate objectives as well as understand the inherent risks to which the organisation is then exposed.

In this way, Boards can establish a framework of risk management, control and assurance that binds their involvement with the operational management of the organisation in a way that drives performance management, reporting processes and therefore transparency.

As Board time is precious, a critical component of governance is that the Board is able to identify where it must place its attention. The emphasis of its role is established as being strategic but it ignores its responsibility to provide appropriate challenge and support to the Executive at its peril. Delegation and subsequent trust must be balanced by a process of openness, assurance and reliability of management information that promotes confidence and success.

Copyright Š Gateway Assure 2015 registered in England and Wales - MCH House, Bailey Drive, Gillingham, ME8 0PZ - Company number: 08232033

An essential feature of good governance is therefore the establishment of a Board Assurance Framework that enables focus at all levels on the things that really matter. Recognition in real time that things are getting out of hand is critical if catastrophic organisational failure is to be avoided.

In this respect, the Executive must feel confident that is raising matters of concern that the Board’s re-action will be constructive, supportive and in the best interests of the organisation. In April 2015, we experienced another example with the disruption caused by underground fires on the Kingsway in the Holborn area of Central London; this resulted in the evacuation of some 5,000 people and caused disruption to many more. The cause unknown; probably not deliberate but the effects wide felt.

FRAUD – an ever present conundrum In the current changing financial climate which sees different sectors facing challenges depending on the relative position in the business cycle – fraud which remains an ever present feature within organisational control is again emerging as a significant problem that must be addressed.

A key question though reflects the level of worthwhile investment that organisations must deploy to combat losses without it becoming disproportionate. A key component of establishing an effective anti-fraud culture is an understanding of where vulnerability exists. Through obtaining such insight not only can appropriate counter fraud policies including whistle-blowing be put in place, but organisations can ensure that key controls exist that deter, prevent and detect issues of concern.

Risk Management – still using a spreadsheet?

In certain cases a spreadsheet can be a reasonable mechanism for the identification and mitigation of risk. However as organisation becomes more complex and diverse risk management must be automated in order to provide real time information to the Executive and Board regarding potential problems and their anticipated impact. Effective risk management does therefore not replace good management but assist it.

RiskMateTM is a web based management tool that can be operated through a facilities management arrangement delivered by Gateway or by your organisation through the identification of Risk Managers, Owners and Operators.

RiskMateTM software is fully hosted in a secure environment, allowing remote user access to your selected users and therefore enabling real time integration with other governance information.

Free trial at www.riskmate.uk

The environment in which each organisation works provides additional complexity as it influences the degree to which internal or external fraud represents a threat. In industries where pay restraint remains, reducing emphasis on controls provides opportunity – issues reflect the theft of controlled drugs, stock and data for re-sale by employees. In sectors where changing government policy is placing pressure on resources, this creates an opportunity for external fraud, as third parties take advantage of uncertainty and a lack of control. Even in business that are flourishing as the economy recovers there is no room for complacency as the cost of fraud is all too often masked by an improving bottom-line.

The messages are therefore clear, recognise that fraud impacts on all organisations, understand where your organisation is vulnerable and implement effective measures that reduce its impact to tolerable levels.

For information relating to the governance, risk and health check services offered by Gateway Assure please visit our website at www.gatewayassure.com or call our enquiries help line on 01634 334697 Copyright © Gateway Assure 2015 registered in England and Wales - MCH House, Bailey Drive, Gillingham, ME8 0PZ - Company number: 08232033