A little risk can be a good thing, says report from LGiU and Zurich, yet 99% of councils surveyed have no risk strategy for new era of community involvement
By continuing to avoid risk*, councils could miss the opportunity to mobilise communities to run local services, warns a joint report by think tank ‘the Local Government Information Unit’ (LGiU) and leading public sector insurer Zurich.
Launched at this week’s SOLACE summit in Edinburgh, the report, Risk and reward, highlights the difficulties councils face to deliver more for less faced by the combined challenge of tough financial climate and the Government’s localism agenda. However, by adopting a more strategic approach to risk which embraces community involvement, councils could create better service provision and increase cost efficiencies.
New laws that allow communities to run services – like the Community Right to Buy and Right to Challenge – will result in councils having to take on new and different types of risk. Yet, according to the report’s findings, almost all councils surveyed (99%) have no specific strategy in place for managing risks associated with new community powers.**
The report finds that councils are sceptical about how willing and able communities are to take on the delivery of services or to manage assets. Almost two-thirds (64%) of respondents felt the capacity of the community sector in managing services or assets was ‘low’ or ‘very low’, although only one in five (20%) questioned had formally assessed the community’s appetite for more involvement.
The report recommends councils to adopt an eight-point risk manifesto for a more flexible approach to risk. Recommended measures include:
1) Establishing a scrutiny panel dedicated to corporate risk management and the voluntary and community sector;
2) Producing a risk appetite assessment for services across the council, determining the authority’s appetite for risk, and which areas are most appropriate for community involvement;
3) Auditing the local community’s appetite and capacity for risk;
4) Preparing for potential demand side risks on the part of the community;
5) developing a strategy for managing the implications of the Community Right to Buy and Community Right to Challenge;
6) Reviewing the accessibility of procurement and commissioning policies;
7) Ensuring clarity of communication regarding the distribution of risk with the community sector;
8) Investing in capacity and resilience building.
Jonathan Carr-West, Policy Director at LGiU, said: “The services councils deliver have a real impact on people’s lives so it’s completely understandable why they don’t want to take too many risks with them. But the combination of pressure on the public finances and long term societal, economic and demographic changes means that we cannot continue to deliver public services in the same old way. These are not challenges we can opt out of and we need real innovation. In this context, risk avoidance may be the riskiest thing of all.”
Andrew Jepp, Director of Public Services at Zurich Municipal, said: “The report clearly demonstrates that councils must re-evaluate their risk management strategies if they are to deal effectively with the new landscape of public service delivery presented by the Localism Bill. There needs to be an appreciation across the sector that service failure may occasionally be the price of innovation, but that in the long-run the cost of risk aversion is far greater.
“Many councils currently prioritise those services that have the most manageable risks. Yet the risks presented by community involvement in service delivery, when thoroughly analysed and appropriately managed, may instead lead to innovative, effective solutions. I hope the recommendations in this report will help to shape the risk management debate ahead”.
The research used in ‘Risk and Reward: Local government and risk in the new public realm’ was conducted by the LGiU among council leaders, chief executives, cabinet members and policy leads in over 90 councils.
Other findings of Risk and Reward include:
• Councils were particularly risk averse in regard to commissioning children’s services, with which two fifths (41%) said they were ‘unlikely to take any risks’. Almost a third (29%) reported the same for adult social care
Zurich Municipal will be issuing a companion report, "Understanding Risk Appetite: the key to successful devolution", in the coming weeks. The report aims to provide senior level executives broad guidance on understanding the issue.
*Half of councils (50%) surveyed said they are ‘risk averse’ or ‘very risk averse’.
**When asked “ Do you have a strategy for managing risk associated with the Community Right to Challenge and Right to Buy at present?”, 99% of councils answered ‘no’.
Download the full report
Download the summary
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For further information contact:
Rajan Lakhani, Senior Media Relations Manager, Zurich UK: 020 7648 3503
Jonathan Carr-West, Policy Director, LGiU: 020 7554 2839
Notes to Editors:
Zurich’s UK General Insurance division is part of Zurich Insurance plc, and supplies personal, commercial and local authority insurance through a variety of distribution channels. Based at locations all across the UK, with large sites in Birmingham, Cardiff, London, Farnborough and Whiteley, the division employs approximately 4,200 people.
Zurich Municipal, part of UKGI, is the leading provider of risk and insurance solutions to Britain's public services. We are dedicated to providing expert advice and support to public service providers including local authorities, social housing providers, educational institutions and charities and voluntary organisations. For information visit http://www.zurich.co.uk/municipal/zmhome/welcome.htm
Zurich Financial Services Group (Zurich) is a leading multi-line insurance provider with a global network of subsidiaries and offices in Europe, North America, Latin America, Asia-Pacific and the Middle East as well as other markets. It offers a wide range of general insurance and life insurance products and services for individuals, small businesses, mid-sized and large companies as well as multinational corporations.
Zurich employs about 60,000 people serving customers in more than 170 countries. Founded in 1872, the Group is headquartered in Zurich, Switzerland. Zurich Financial Services Ltd (ZURN) is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt program (ZFSVY) which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com
The LGiU is an award winning think-tank. Our mission is to strengthen local democracy to put citizens in control of their own lives, communities and local services. We work with local councils and other public services providers, along with a wider network of public, private and third sector organisations. Through information, innovation and influencing public debate, we help to address policy challenges such as demographic, environmental and economic change, improving healthcare and reforming the criminal justice system.
