Refine search Expand filter

Reports

Published

Actions for Managing risks in the NSW public sector: risk culture and capability

Managing risks in the NSW public sector: risk culture and capability

Finance
Health
Justice
Treasury
Internal controls and governance
Management and administration
Risk
Workforce and capability

The Ministry of Health, NSW Fair Trading, NSW Police Force, and NSW Treasury Corporation are taking steps to strengthen their risk culture, according to a report released today by the Auditor-General, Margaret Crawford. 'Senior management communicates the importance of managing risk to their staff, and there are many examples of risk management being integrated into daily activities', the Auditor-General said.

We did find that three of the agencies we examined could strengthen their culture so that all employees feel comfortable speaking openly about risks. To support innovation, senior management could also do better at communicating to their staff the levels of risk they are willing to accept.

Effective risk management is essential to good governance, and supports staff at all levels to make informed judgements and decisions. At a time when government is encouraging innovation and exploring new service delivery models, effective risk management is about seizing opportunities as well as managing threats.

Over the past decade, governments and regulators around the world have increasingly turned their attention to risk culture. It is now widely accepted that organisational culture is a key element of risk management because it influences how people recognise and engage with risk. Neglecting this ‘soft’ side of risk management can prevent institutions from managing risks that threaten their success and lead to missed opportunities for change, improvement or innovation.

This audit assessed how effectively NSW Government agencies are building risk management capabilities and embedding a sound risk culture throughout their organisations. To do this we examined whether:

  • agencies can demonstrate that senior management is committed to risk management
  • information about risk is communicated effectively throughout agencies
  • agencies are building risk management capabilities.

The audit examined four agencies: the Ministry of Health, the NSW Fair Trading function within the Department of Finance, Services and Innovation, NSW Police Force and NSW Treasury Corporation (TCorp). NSW Treasury was also included as the agency responsible for the NSW Government's risk management framework.

Conclusion
All four agencies examined in the audit are taking steps to strengthen their risk culture. In these agencies, senior management communicates the importance of managing risk to their staff. They have risk management policies and funded central functions to oversee risk management. We also found many examples of risk management being integrated into daily activities.
That said, three of the four case study agencies could do more to understand their existing risk culture. As good practice, agencies should monitor their employees’ attitude to risk. Without a clear understanding of how employees identify and engage with risk, it is difficult to tell whether the 'tone' set by the executive and management is aligned with employee behaviours.
Our survey of risk culture found that three agencies could strengthen a culture of open communication, so that all employees feel comfortable speaking openly about risks. To support innovation, senior management could also do better at communicating to their staff the levels of risk they are willing to accept.
Some agencies are performing better than others in building their risk capabilities. Three case study agencies have reviewed the risk-related skills and knowledge of their workforce, but only one agency has addressed the gaps the review identified. In three agencies, staff also need more practical guidance on how to manage risks that are relevant to their day-to-day responsibilities.
NSW Treasury provides agencies with direction and guidance on risk management through policy and guidelines. Its principles-based approach to risk management is consistent with better practice. Nevertheless, there is scope for NSW Treasury to develop additional practical guidance and tools to support a better risk culture in the NSW public sector. NSW Treasury should encourage agency heads to form a view on the current risk culture in their agencies, identify desirable changes to that risk culture, and take steps to address those changes. 

In assessing an agency’s risk culture, we focused on four key areas:

Executive sponsorship (tone at the top)

In the four agencies we reviewed, senior management is communicating the importance of managing risk. They have endorsed risk management frameworks and funded central functions tasked with overseeing risk management within their agencies.

That said, we found that three case study agencies do not measure their existing risk culture. Without clear measures of how employees identify and engage with risk, it is difficult for agencies to tell whether employee's behaviours are aligned with the 'tone' set by the executive and management.

For example, in some agencies we examined we found a disconnect between risk tolerances espoused by senior management and how these concepts were understood by staff.

Employee perceptions of risk management

Our survey of staff indicated that while senior leaders have communicated the importance of managing risk, more could be done to strengthen a culture of open communication so that all employees feel comfortable speaking openly about risks. We found that senior management could better communicate to their staff the levels of risk they should be willing to accept.

Integration of risk management into daily activities and links to decision-making

We found examples of risk management being integrated into daily activities. On the other hand, we also identified areas where risk management deviated from good practice. For example, we found that corporate risk registers are not consistently used as a tool to support decision-making.

Support and guidance to help staff manage risks

Most case study agencies are monitoring risk-related skills and knowledge of their workforce, but only one agency has addressed the gaps it identified. While agencies are providing risk management training, surveyed staff in three case study agencies reported that risk management training is not adequate.

NSW Treasury provides agencies with direction and guidance on risk management through policy and guidelines. In line with better practice, NSW Treasury's principles-based policy acknowledges that individual agencies are in a better position to understand their own risks and design risk management frameworks that address those risks. Nevertheless, there is scope for NSW Treasury to refine its guidance material to support a better risk culture in the NSW public sector.

Recommendation

By May 2019, NSW Treasury should:

  • Review the scope of its risk management guidance, and identify additional guidance, training or activities to improve risk culture across the NSW public sector. This should focus on encouraging agency heads to form a view on the current risk culture in their agencies, identify desirable changes to that risk culture, and take steps to address those changes.

Published

Actions for Volume Seven 2011 focus on Law, Order and Emergency Services

Volume Seven 2011 focus on Law, Order and Emergency Services

Justice
Financial reporting
Management and administration
Procurement
Project management
Risk

The audits of these agencies’ financial statements for the year ended 30 June 2011 resulted in unmodified audit opinions within the Independent Auditor’s Reports. It is recommended that emergency services agencies continue to develop and implement comprehensive volunteer workforce management plans to ensure they have the right volunteer resources.

Published

Actions for Responding to Domestic and Family Violence

Responding to Domestic and Family Violence

Community Services
Justice
Health
Internal controls and governance
Management and administration
Service delivery

Organisations generally work together to improve the safety of victims when there is an overt and serious crisis, particularly where children are involved. There are no standard ways for victims and perpetrators to access help that might prevent ongoing violence and address underlying issues. This is particularly problematic where there are repeat victims and perpetrators, many of whom have complex mental health, drug and alcohol problems and are difficult to work with. New South Wales has trialled a number of projects to improve the way that organisations work together to support vulnerable people in particular communities.

 

Parliamentary reference - Report number #218 - released 8 November 2011

Published

Actions for The effectiveness of cautioning for minor Cannabis offences

The effectiveness of cautioning for minor Cannabis offences

Justice
Health
Project management
Service delivery

Over the last ten years the NSW Police Force (Police) has used cautioning to divert over 39,000 minor cannabis offenders from the courts, saving at least $20 million in court costs. People cautioned for minor cannabis offences are also less likely to reoffend than those dealt with by the courts. Adults are more likely to be cautioned for minor cannabis offences today than when cautioning was introduced ten years ago. However this is not the case for young offenders who are more likely to be charged today. Cautioning may help people think about the consequences of their cannabis use. However few people seek help to reduce it with only 1.6 per cent of offenders contacting the drug helpline under the adult cautioning scheme. And there have been no evaluations yet on whether cautioning reduces drug use in NSW.

 

Parliamentary reference - Report number #211 - released 7 April 2011

Published

Actions for Police Rostering

Police Rostering

Justice
Internal controls and governance
Management and administration
Risk
Service delivery
Workforce and capability

Overall, the NSW Police Force (the Force) is not meeting its target for responding to urgent calls for assistance. Today, one in four complaints is about customer service. Victims of crime report issues including difficulties in contacting an officer and frustration at having to wait for an officer to return to duty to find out about their case. The timeliness of investigations is also at risk when follow-up is delayed. Seventy per cent of commanders surveyed indicated that rosters did not support continuity of investigations or victims’ needs.

We are also concerned that the current roster pattern may not be in the best interest of the health and safety of officers. Sick and injury leave is higher in NSW than other states and the Force is yet to assess the extent to which rosters may contribute to this. The Force also needs to do more to protect its general duties officers from fatigue in line with contemporary practice for managing shiftwork.

 

Parliamentary reference - Report number #173 - released 5 December 2007

Published

Actions for Dealing with household burglaries

Dealing with household burglaries

Justice
Management and administration
Risk
Service delivery
Workforce and capability

The NSW Police Force has done well to maintain a downward trend in household burglaries in NSW since 2001. Police recognise the impact this crime has on the community’s perception of security and safety. Success has come from a continued focus on prevention and enforcement. However, there are other factors which have influenced this result. These include a rise in the rate and length of imprisonment, the heroin drought in 2001, increases in the number of heroin users entering treatment, low levels of unemployment, and increases in the average weekly earnings of young males.

 

Parliamentary reference - Report number #169 - released 27 June 2007

Published

Actions for Addressing the needs of young offenders

Addressing the needs of young offenders

Justice
Management and administration
Risk
Service delivery
Shared services and collaboration
Workforce and capability

The Department of Juvenile Justice and the NSW Police Force generally work together and with other agencies to identify and address the needs of young offenders. We found that this is done particularly well for young offenders who end up in detention and under community supervision. Both the Department of Juvenile Justice and the NSW Police Force have put some practices in place to identify and address the needs of young offenders diverted from the Children’s Court. However, we found that they are not doing this systematically.

 

Parliamentary reference - Report number #164 - released 28 March 2007