November 2010 - Spending Review Cuts

Spending Review 2010:  Effective management of risk needed more than ever

Alarm, the public risk management association, is appealing to public service organisations to ensure that risk management is central to their drive for efficiency.

With Chancellor George Osborne cutting local government funding by 28% over the next four years but has vowed to give councils more financial control. The cuts made under the Spending Review will see councils lose around 7% off their spending power each year until 2014/15. In addition to the cuts being made in education, police and social care budgets, public service organisations will inevitably need to prepare themselves now to meet the challenges of doing more with less.

This will bring with it challenges that many organisations are not ready to face, it is therefore imperative that effective risk management practices are now out in place.

Lynn Drennan, CEO of Alarm, said: “Risks facing the public sector in the light of the CSR cuts include loss of key personnel, a reduction in the quality of services being delivered, reputational damage and public dissatisfaction. Organisations may also face industrial action and it is therefore imperative that risk management is high on the senior management’s agenda, to make sure these threats are identified and mitigated”.

Local authorities may also face the increased risk of fraud and economic crime. According to Alarm chair, Tracy Barnett, “There is a real risk of increased instances of fraud and financial irregularity. During changes to organisational structures, there is a strong possibility that control systems will break down, putting the authority at risk. It is well documented that, in times of change and dissatisfaction, instances of fraud rise. This is particularly true when staff are disgruntled, which is invariably the case when major restructuring or redundancies occur.”