Newmarket Town Council

Risk management scheme  

Introduction

This document sets out the framework on which risk management processes at Newmarket Town Council are based. This framework should assist in ensuring that a consistent approach is taken across the Council for the identification, assessment and evaluation of risks, and for ensuring that actions are proportionate to identified risks, thereby efficiently and effectively utilising resources and maintaining a balance between risks and controls. Risk management will strengthen the ability of the Council to achieve its objectives and enhance the value of services provided.

Risk Management  

Risk – ‘Risk is the combination of the probability of an event and its consequence. Consequences can range from positive to negative’.

Risk Management – ‘Process which aims to help organisations understand, evaluate and take action on all their risks with a view to increasing the probability of success and reducing the likelihood of failure.’ [Institute of Risk Management (IRM)]

Risk management is an essential feature of good management and applies to all aspects of the Council’s business.

There is an Audit requirement under the Accounts and Audit (England) Regulations 2015 s.3 to establish and maintain a systematic strategy, framework and process for managing risk. Risks and their control will be collated in a Risk Register. A statement about the system of internal control and the management of risk will be included as part of the Annual Statement of Accounts and summarised in the Council’s Business Plan.

Implementing the strategy involves identifying, analysing/prioritising, managing and monitoring risks.

Risks Types 

Strategic Risk – long-term adverse impacts from poor decision-making or poor implementation. Risks causing damage to the reputation of the Council, loss of public confidence, or in a worse case statutory intervention.

Compliance Risk – failure to comply with legislation, or laid down procedures or the lack of documentation to prove compliance. Risks exposure to prosecution, judicial review, employment tribunals, inability to enforce contracts etc.

Financial Risk – fraud and corruption, waste, excess demand for services, bad debts. Risk of additional audit investigation, objection to accounts, reduced service delivery, dramatically increased Council tax precept levels/impact on Council reserves.

Operating Risk – failure to deliver services effectively, malfunctioning equipment, hazards to service users, the general public or staff, damage to property. Risk of insurance claims, higher insurance premiums, lengthy recovery processes.

Not all these risks are insurable and for some the premiums may not be cost-effective. Even where insurance is available, money may not be an adequate recompense. The emphasis should always be on eliminating or minimising risk. Risk can be connected to opportunities as well as potential threats.

Risk Identification – Identifying and understanding the hazards and risks facing the Council is crucial if informed decisions are to be made about policies or service delivery methods. The risks associated with these decisions can then be effectively managed.

Risk Analysis –Identified risks need to be systematically and accurately assessed using proven techniques. Analysis should make full use of any available data on the potential frequency of events and their consequences.

Risk Prioritisation – An assessment should be undertaken of the impact and likelihood of risks occurring, with impact and likelihood being scored Low (1), Medium (2) and High (3). The scores for both impact and likelihood are scored in this manner. Risks scoring 6 and above will be subject to detailed consideration and preparation of a contingency/action plan to appropriately control the risk.

Risk Control – Risk control is the process of taking action to minimise the likelihood of the risk event occurring and/or reducing the severity of the consequences should it occur. Typically, risk control requires the identification and implementation of revised operating procedures, but in exceptional cases more drastic action will be required to reduce the risk to an acceptable level.

Options for control include:

Tolerate – documenting a conscious decision after assessment of areas where the Council accepts or tolerates risk.

Treat – loss control measures are implemented to reduce the impact/ likelihood of the risk occurring;

Transfer – the financial impact is passed to a third party or by way of insurance. This is good for mitigating financial risks or risks to assets; Terminate – the circumstances from which the risk arises are ceased so that the risk no longer exists;

Risk Register –Details on the impact and likelihood matrix are included below. A summary is carried forward in to the annual Business Plan.

Health and Safety risks are assessed in a similar manner but are assessed, recorded and managed separately to the matrix below.

Risk Monitoring – The risk management process does not finish with putting any risk control procedures in place. Their effectiveness in controlling risk must be monitored and reviewed. It is also important to assess whether the nature of any risk has changed over time.

The information generated from applying the risk management process will help to ensure that risks can be avoided or minimised in the future. It will also inform judgements on the nature and extent of insurance cover and the balance to be reached between self-insurance and external protection.

Roles and Responsibilities –

Councillors – risk management is seen as a key part of the councillors’ stewardship role and there is an expectation that Elected Members will lead and monitor the approach adopted. This will include:  Approval of the Risk Management Strategy;

Consideration of the Annual Risk Assessment Matrix

Proper Officer and Responsible Financial Officer– will ensure that Risk Management is an integral part of any service review process, ensure that recommendations for risk control are detailed in service review reports and will lead in developing and monitoring Performance Indicators for Risk Management.

Project Officers and Service Managers – when developing projects or recommending service changes will ensure that risks are identified and the measures to eliminate or control risks are documented in agenda reports/briefing papers to be considered by Council and committees.

Employees – will undertake their job within risk management guidelines ensuring that the skills and knowledge passed to them are used effectively.

Role of Internal Audit – the Internal Audit Team provides an important scrutiny role carrying out audits to provide independent assurance to the Council. Internal Audit assists the Council in identifying both its financial and operational risks and seeks to assist the Council in developing and implementing proper arrangements to manage them, including adequate and effective systems of internal control to reduce or eliminate the likelihood of errors or fraud.

Training – Risk Management training will be provided to key staff. Councillors will receive appropriate briefings.

Risk Assessment and Management (Financial & Business). November 2020

Financial: Income.         L=Likelyhood.         I=Impact.  R=Risk

Activity	Risk Identified	L	I	R	Management of Risk	Action	By Who	By When
Precept	Not Submitted Not Paid by District Council Adequacy of Precept Adequacy of Budget provision	L L L L	H H H H	3 3 3 3	Full TC Minute & Diary to forward request to District Check and Report if not received by end of April Calculated on need after other income taken from estimated expenditure Each committee drafts budget in October  and continues to assess and evaluate need to January. Proposed budgets to F&P and Council with explanatory notes. Budgets discussed in public meetings	Diary Diary/Bank Statement Ensure Accountancy help, full consultation with committees, base on Strategy. Draft budget on Accountancy system. Ensure all expenditure accounted for. Ensure previous year’s actual figures considered. Use RFO, Proper Officer & Accountant.
Responsible Financial Officer	Lack of permanent, experienced RFO & role defined in Financial Regs.	L	M	2	In-house training & knowledge sharing.  Option to engage temporary RFO if necessary	Produce documentation of procedural processes	RFO
Funds to repay PWLB loans	adequate provision in Budget	L	M	2	Majority of repayment built in.	ensure adequate budget provision made for future years
Charges       from Severals Pavilion	Set realistic budget income level	M	M	4	Manage charges to ensure optimum use of Pavilion	work with events manager to build strategy to increase bookings by reducing charges	EM

 

 

Activity	Risk Identified	L	I	R	Management of Risk	Action	By Who	By When
Charges Cemetery	Plot Allocation Receipt of fees	M	M	4	Outsourced to West Suffolk. Risk managed by West Suffolk.	Put Monitoring in place of SLA quarterly burial income & expenditure	RFO	Quarterly
Charges Allotments	Below Budget prediction	L	L	2	From Associations, so predictable. Receive annual report on allotment take-up from the Allotment Association.	Need to monitor to ensure receipt.  Invoiced in January annually	RFO	February
Investment Income	Adequate          to         meet             Budget prediction	L	M	2	Reviewed annually at year end. Low return at present but realistic prediction.	Keep under review
Grant for Public Toilets	Below budget prediction	L	L	1	Regular contribution from District Council received of £3,300	Need to monitor to ensure receipt.  Invoiced in April annually	RFO	June
Income         from Memorial Hall	Sufficient income to cover costs.	M	L	2	Manage charges to ensure optimum use of Memorial Hall, Chamber & EC Room.  Set realistic budget of expenditure.	Retain events manager and ensure that income is reviewed monthly at Leisure Services	EM	Monthly
VAT Claim	Lack of VAT reclaim	L	M	2	In accordance with Financial Regs.  Claim paid directly in to Council’s bank account and noted as receipt in cashbook. Reclaims on quarterly basis.	F&P to scrutinise to ensure receipt	RFO	Quarterly
Administration of Accounts	Receipt arrangements. Invoices may not be sent out in timely manner or not at all.	M	H	6	Internal controls in accordance with Financial Regs. Receipts currently entered weekly by RFO. Invoices prepared in accordance with procedures. Event Manager prepares Booking invoices monthly.	F and P to review aged debtors report and balance sheet monthly.	EM / RFO	Monthly
Handling Cash from events / petty cash	Misappropriation of funds (events)       Petty Cash	L	H	3	Cash should be handled by 2 people, recorded in paying-in book and relevant Cashbook and banked asap. Adequate fidelity insurance in place.   Allowed to sum of £150, renewed as required. Each cheque signed by 2 signatories. All petty cash expenditure is recorded in Petty Cash monthly spreadsheet and CB2. Balanced monthly.	Review operating procedure.         Review operating procedure.

Financial: Expenditure

Activity	Risk Identified	L	I	R	Management of Risk	Action	By Who	By When
Salaries	Inadequate funding for salaries & costs Wrong pay       rate,      hours             or deductions.	L L	l L	2 1	Posts fully costed. Budget accurately set. Accurate budget set Check to PAYE calculations Check with input	Review all salaries and conditions of service. Maintain realistic HR EMR Ensure Operating Procedure in place with TC checking monthly payroll.
Direct   Costs and Overhead expenses	Goods not supplied Invoice incorrectly calculated payment to wrong party	L     L	M     M	2   2	Order system. Goods/services checked against orders Check arithmetic / Purchase order Invoice initialled by signatories.	Review operating system as necessary
Grants	Power to Pay Agreement of Council to pay Cheque / Bank Transfer Value for Money Work not done	L L L M M	M L L M M	2 1 1 4 4	NTC holds General Power Minute at Full Town Council Signatory / online authorisation by 2 signatories Review merits before approval	Maintain General Power. Ensure qualified member of staff & confirmation by FTC Consider creating EMR for Grants Consider creating a Grants Policy by 2022 Prioritise in accordance with Strategic objectives. Pay on completion, on invoice/receipt
Election Costs	Invoice at agreed rate. Maintain EMR for 4-year & casual	L	M	2	Accrue annually	Establish EMR
Vat Payment	Vat Analysis & payment not made on time	M	L	2	All items in cash book. Payment for authorisation sheet. Payments up to date.	Verify, pay after monthly accounts.
Reserves General	Adequacy	L	M	2	Consider at budget setting, set at 25% of net turnover	Revise medium term financial plan to build general reserves
Reserves Earmarked	Adequacy	L	M	2	Consider at budget setting and year end	Assess against Strategy
Assets	Loss, damage etc. Risk to third party	M M	M M	4 4	Regular inspections, update insurance and register Review adequacy of public liability insurance Safety inspections.	Complete full inspection of assets and inventory
Staff	Loss of key personnel Fraud by staff	L L	H H	3 3	Hours, health, stress, uncertainty, conditions etc. Fidelity guarantee insurance. Monitoring by TCM and RFO Reports and authority to pay by councilors.	Council to review terms and conditions and redefine member-officer roles. Segregation of duties, Ensure that appraisal system followed.
Borrowing	Authority to borrow	L	M	2	Authority from full Council and application to PWLB	Ensure adequate provision in future Budgets

 

Legal Powers	Illegal activity or payment	L	H	3	Education of members as to their legal powers. Maintain General Power.	Put training in place for councillors.
Financial Records	Non-standard or non- Compliant records	L	M	3	Regular internal audit; interim and year end. Regular expenditure/income reports to F&P Committee	Continue system of regular review and internal audit.
Medium Term Financial Plan	Need to plan for longer term	L	L	1	4-yearly renewal.	maintain MTFS linked to Strategy. Annual review.
Expenses	Misappropriation	L	H	3	Staff & councillor expenses managed by Proper Officer/RFO. Mileage should be authorized in advance. Raised through expenses claim form. Expenses by councillors’ expenses recorded in Ledger. RFO will raise cheque, signed by 2 signatories.	Need to ensure signatories cannot authorize own expenses.
Credit cards	Misuse by holders	M	M	4	Credit card for use by TCM and RFO. CB4 balanced with Credit Card statement and checked monthly.	Maintain a check on credit card limit.

 

Strategic

Activity	Risk Identified	L	I	R	Management of Risk	Action
Grants	Is Grant Scheme linked to strategic priorities?	M	M	4	Grants given to certain community projects.	Can be cost effective but need to be linked to strategic priorities & enabled voluntary sector.
Provision        of existing Services	Unable to afford or deliver	M	M	4	Provision included in budget. Review and outsourcing should reduce cost.	Need to be in accordance with Strategy & be included in Business Plan. Risk assessment & full costing of proposals
Additional functions        in future	Will needs & wishes of town be identified? Will Town Council be prepared to fill gaps?	M	M	4	No new functions proposed, but plan to free up money from outsourcing and look at priorities.	Need to bring proposals out through Strategy. Need risk assessment on new functions and allocate resources.
Neighbourhood Plan & Council Strategy	Lack of clear direction & allocation of resources Unable to implement strategy	M   M	L   L	2   2	Neighbourhood Plan Committee formed. .	Monthly NP Ctte meetings   NP Budget set.

 

Operational

Activity		Risk Identified	L	I	R	Management of Risk	Action
Insurance Cover for Council		Risk to finances, staff and third parties if inadequate cover.   Action taken against Council by employee or third party	M	H	6	Buildings/ Land/ Carparks/ Allotments/ Cemeteries/bus shelters etc. Vehicles & Plant Contents Equipment Fidelity Theft Personal Injury (Councillors & Officers) Public Liability Slander/Libel Employer Liability External Events	Monitor Cover and update as necessary, particularly in light of outsourcing. Clarify liabilities
Security		Risk to: 1: Staff 2: IT 3: Buildings	L L L	H H H	3 3 3	Key holding procedures. Backup files offsite, password protection Maintain security of building, alarms, fire safety	Review all procedures as necessary. Abbey Security for night-time security N-CIS contract for support & backup Abbey Security / Active Security
Regular maintenance of assets and		Risk to staff & third parties also of loss or damage	M	M	4	Annual Business Risk Assessments completed Adequate legislative safety checks of assets	Monitor and review.
Asset Register		Risk if assets not properly recorded & valued	L	M	2	Asset Register,	Review and update. Add maps and photographs.
Council Liability		Lone person working-compliance with law	M	M	4	Procedure for safety but needs to be reviewed with new staff structure.	Monitor & review
		Contract of Employment	M	M	4	Proposed for all staff but confusion over terms and conditions.	Need to review HR policies. Need to ensure all permanent staff have Contracts as appointed
		Duty of Care to visitors, staff and councillors	M	H	6	Adequate insurance, risk assessments and action plans, but management weak due to lack of staff. H&S risk assessments carried our recently & recommendations being actioned	Monitor, review & implement improvements
		Other Employment Conditions compliance with legislation	L	L	2	Confusion over current Green book application.	New conditions adopted.  Work with HR support company to ensure continued compliance
		Loss of Key Staff	M	H	6	Need contingency      arrangements    and           succession planning	High risk of not keeping staff if conditions not adequate and a stable environment not established.
		Councillors- must be adequately advised of their responsibilities and culpability.	M	M	4	Needs to re-define member and officer roles.	Induction & refresher training. Review            Code    and       consider           Member-officer protocol.
Health Safety	and	Responsible for Members, Employees, Public & Contractors	M	M	4	Need regular Safety risk assessments both general and specialist, safety policy and safe working procedures.	Need review of risk assessments & SWPs. Ellis Whittam – Professional Advisor Regular staff reviews.
Town               & Country Planning		Adverse effect on community amenities if fail to respond to Planning applications or Local Plan consultations	L	M	2	Council respond through Development & Planning Committee or Council for major applications.	Review & follow processes.
Training		Essential for councillors & staff if to reach potential	M	M	4	No annual training & development plans	Need to put in place Training & Development Policy, annual plan and build in to Business Plan.
Freedom         of information		Need to respond to requests	L	H	3	Procedure to be accurate and timely	Monitor & report
Governance Documents		Interrupt operations if not current & following best practice. Some are legal requirement. Consultation documents	M     M	M     M	4     4	Council undertaking a review in line with best practice	Complete review asap.     F&P Ctte review
Press releases		Comply with publicity code?   Lost opportunity for good public relations.	M	M	4	Few issued, guidance is established.	Policy in place.
Data Protection		Need to keep data secure	M	H	6	Need operational procedure. Current Registration to ICO for GDPR compliance.  Cllr emails established and training.	Put OP in place and monitor how data is stored, made available and disposed of.
Byelaws		Reference         to         models             when adopting	L	L	1	Not currently applicable	–
Archiving documents		Security and statutory retention periods	M	M	4	Needs to be in accordance with a document retention policy and GDPR.	Adopt document retention policy and review.
Public Access		Public need to be able to safely access services according to need.	L	M	2	Services available at stated times. Subject to safety inspections	Monitor
Contracts		Compliance with legislation/ governance documents when letting	M	M	4	Prepare specification, determine on price and quality.	Need to consider legal advice on outsourcing process before finalizing decision. Need to finalise split of responsibilities. Separate Contract Pollicy.
		Risk to performance and cost if not properly monitored	M	M	4	No monitoring provision in place	Monitor against specification and price

Compliance

Activity	Risk Identified		L	I	R	Management of Risk	Action
Legal Powers	Not      having    legal       powers activities	for	L	L	1	Council have General Power of Competence. Have two thirds elected Members and CiLCA qualified Clerk.
Minutes	Accurate and Legal Loss of Minutes Lack of transparency		L L L	H H M	3 3 2	Decisions        of         Council/committees       recorded           as resolution/recommendation. Approved at following meeting, adopted at Council Minutes in lose form with numbered pages. Each page initialed by Chairman Experienced Minute Clerk. Minutes in TC’s office and Admin office and archived in memorial Hall. More recent on IT & backed up. Usually available in office and on Website	. Website needs to be up to date.
Confidential Matters	Accurate and Legal		L	H	3	On agenda, but obliquely worded.	Need to ensure minutes of confidential items are public minutes but do not reveal confidential information
Members Interests	Conflict of Interest		M	L	2	Update declarations of interest Recording on minutes of declarations	Update protocols for councillors.  Prompt councillors to update.
Councillor Declarations	Accurate and Legal		M	H	6	Copies on Website or link to WSC.	Review & update as required.  Training requirement for councillors.
Dispensations	None compliance with legislation		M	M	4	Require individual applications and approvals.	Review & follow process
Budget & Precept	In accordance with legislation		L	H	3	Need to make resolution for both Budget and Precept
Accounts & Annual Return	In accordance with Regulations		L	H	3	Compliance with Regulations	follow process
Website	Not compliant with Transparency Code		L	M	2		Review & update as required.
Code of Conduct	Compliant with legislation & best practice		L	M	2	Code Adopted.	Review or add guide. Training.
Agendas and Notices	Not complying with legislation		L	H	3	Follow legislation and adopted practices.	Review & follow process
Freedom of Information	Legal compliance		L	M	2	Need to follow legislation, allow request by letter/email.	Review process and ensure staff can administer
Publication Scheme	Legal compliance		L	M	2	On website	Review Publication Scheme and Information Guide. Update on Website.
Data Protection	Keep Legal		L	M	2	Operational procedure in place. Current Registration with ICO in d place. Details on website.	Monitor how data is stored, made available and disposed of. Follow guidance.
Charitable Trust	Understanding responsibilities and separate legal decision making		L	L	1	NTC Charitable Trust is a ‘work in progress’	Refer back to F&P for discussion & decision regarding desirability.

 

Statutory Governance Documents	Not compliant with legislation or current best practice	L	M	2	Standing Orders, Standing Orders for Contracts, Financial Regs.	Adopt and review annually.
Staff Resources	Interruption of Services and practices	L	H	3		Ensure 2 admin members fully trained in the Council’s office procedures and practices
Internal & External Audits	Failure to undertake Internal Audit Non-compliance with audit requirements	L     L	H H	3 3	Regular Interim & Year End Internal Auditor. Requirement in Financial Regs that Council must agree response to each recommendation.	Internal auditor appointed. Response to IA included in Business Plan.
Councillors	Act inappropriately and beyond their legal boundaries Lack of transparency Lack of membership/quorum	M L L	H H L	6 3 1	TC responsible for ensuring Declaration of office signed and Code given to them. Members responsible for declaring interest in form to Monitoring Officer and at meetings   Declaration of interest forms displayed on Website and up to date. Attendance and apologies recorded for meetings. Care over quorum. Town Clerk responsible for notifying casual vacancies to WSC and advertising in accordance with legislation.	Training for new and inexperienced councillors.. Declarations & website updated.   Move to new website to ensure transparency code met.

 

Next revision September 2021