'It is disturbing that only a quarter of government departments know how much risk they face in achieving their objectives. Risk management must become an integral feature of the way public services are planned and delivered. Now that the commendable two-year risk programme initiative has ended, it is vital that momentum not be lost.
Mr Leigh was speaking as the committee published its 15th report of the 2004-05 session, which examined the government's risk programme. The report is available on LGCnet.
Risk is a fact of life. Any activity undertaken, whether by individuals, companies or government departments, involves a degree of risk. In many cases risks are worth taking because of the benefits which arise. Often however, citizens can lose out if risks are not properly managed, for example, the 2001 outbreak of foot and mouth disease cost the taxpayer over£3bn and British tourism lost revenues of around£5bn. Risks faced by government departments include those arising from external developments, such as climate instability; those arising for operational reasons, such as projects not being delivered on time and budget; and risks arising from the introduction of new policies and new ways of delivering services.
The government's July 2004 spending review announced its intention to achieve savings of£21.5bn a year, staff reductions of 84,000 in support staff by 2008 and sales of£30bn assets by 2010, whilst also delivering public service agreement targets. Savings on this scale will require new ways of managing services, and a streamlining of controls. There will be a particular need for the associated risks to be managed successfully.
In November 2001 this committee made a number of recommendations to improve departments' risk management. In November 2002, the prime minister launched a two year initiative - the risk programme - to bring focus and drive to departments' efforts to improve their risk management. The programme sought to improve standards of risk management across government by raising awareness of its importance at senior levels; developing and encouraging self-assessment of departments' capabilities; identifying and spreading good practice; and issuing and signposting guidance.
The programme has made recommendations periodically to ministers and to the prime minister about what needs to be done to improve the standard of risk management. The programme ended in December 2004. It is clear that the programme has acted as a catalyst to improve risk management across Whitehall. Our recommendations in this report are intended to help achieve further progress.
The committee recognises that risks need to be taken for tangible improvements in public services to be achieved, and encourages innovation and supports well managed risk taking. Taking opportunities to improve public services requires taking risks, and the ability to manage those risks requires officials to have the skills, knowledge and training to do so.