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The Ministry operates a broad risk matrix or framework listing the strategic and organisational capability risks it faces, and the treatments and measures of success for identifying and managing them. The 10 high-level risks in that framework, and the structures and processes in place for mitigating them, are set out in the table overleaf.
At the beginning of each calendar year the Ministry conducts an environmental scan of the key trends and risks in the international environment. This scan is based on reporting by the Ministry’s overseas posts, surveys, visits and research conducted as part of the ongoing provision of policy advice to Ministers, and the results of ongoing contacts, discussions and consultations with key stakeholders in New Zealand and abroad. The results of the most recent scan are included in the Strategic Direction chapter.
In 2007 the Ministry’s senior management piloted a scheme to strengthen systems for assessing and mitigating significant strategic and capability risks, particularly those with medium-term implications. This involved the in-depth investigation of selected strategic or capability risks over the course of the year. This review was over and above those conducted in the course of the standard monitoring and evaluation cycle. The scheme has since been adopted as an additional control for strengthening the Ministry’s systems for managing significant risks with potential medium-term impact.
There are a number of major risks which the Ministry will be monitoring in the course of the next three years through one or more of its processes such as the standard monitoring and evaluation cycle, project management and quality assurance controls, internal audits, or strategic reviews. These include the close monitoring of NZ Inc coordination under a new and improved operating model including any changes involving NZAID, fragilities in the Pacific, security and regional integration trends in Asia, new forms of trade policy challenges in responding to climate change, managing scarce financial resources in the recession, modernisation of infrastructure and systems through progressive implementation of the Ministry’s information and communications technology, knowledge management and property and capital asset management strategies, and planning for changing staff demographics including retirements.
The Ministry operates separate risk registers with mitigation measures for a number of major projects which it manages, eg in the information technology area. In the period of this Statement of Intent the Ministry also plans to review and strengthen its risk management reporting systems.
Specific risk |
Risk management measures |
Key measures of success we will use |
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1. Strategic leadership Failure to develop and convey a strategic vision for New Zealand’s international relations |
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2. Tradecraft capability Not having the human capability and operational means to support our tradecraft and maintain the Ministry’s comparative advantage |
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3. Changing international environment Failure to understand and interpret the rapidly changing international environment and to develop and implement strategies that would best influence it to New Zealand’s advantage |
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4. Responsiveness to unexpected events Failure to respond quickly and effectively to unanticipated events or unpredictable sudden changes in our operating environment |
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5. Whole-of-government coordination mechanism Not having adequate coordination mechanisms in place and in use across government to ensure the coherent and consistent development and implementation of the Government’s external policies |
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6. Knowledge for policy planning Not having sufficient knowledge and evidence on which to base key decisions over the choice of outputs |
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7. Knowledge and tools for effective intervention Failure to use knowledge and evidence in deciding methods of intervention |
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8. Understanding domestic concerns Lack of attention to the full range of relevant key domestic concerns or viewpoints in the Ministry’s analysis |
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9. Internal leadership and management Not having adequate internal leadership and management to ensure ongoing efficient and effective delivery of the Ministry’s outputs |
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10. Attracting and retaining Not having sufficient staffing capability (skills and quality) to deliver our outcomes to Ministers successfully |
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NZAID shares many of the risks and risk mitigation strategies of the wider Ministry. It does, however, have a number of additional specific risk assessments and mitigations for the many activities and programmes which it delivers.
In 2007, an audit of NZAID’s procurement and contracting identified a number of areas where policy and practices were not meeting public sector expectations. NZAID has implemented a comprehensive multi-year programme of change across policy, systems, practices and tools to address all issues identified in the audit. NZAID is on track to complete this programme by August 2009.
Specific risk |
Risk management measures |
Key measures of success we will use |
|---|---|---|
Global economic crisis impacts on programme outcomes, through partners’ fiscal constraints or through broader economic or social disruption and unrest |
Strengthened monitoring of economic measures; new core focus on sustainable economic development |
Programme reports in 2009 and 2010 conclude that NZAID adapted appropriately, in a timely fashion, and helped partners’ responses to the crisis |
Uncoordinated activities by donors in a country or region leading to duplication of effort, or contradictory activities that counter or cancel each other out |
Monitoring of donor activities in countries, regions and sectors where New Zealand has ODA programmes |
Surveys of donors show many or all donors working off one partner owned strategy Donors working in the same country or region and in the same sector have aligned and/or harmonised programme strategies |
Insecurity and lack of safety for those implementing ODA activities in pre- and post-conflict situations Negative influences from inside and/or outside the country from such sources as international crime, drugs trafficking, etc |
Close monitoring of the security and stability of countries and regions when staff and contractors are present The design and implementation of activities specifically mitigates the risks associated with these issues |
Staff and contractors are not placed in‑country or in-region where instability creates an unacceptable degree of personal risk |
Corruption, political instability and/or inadequate capacity in-country causing disruption, failure or cancellation of programmes and activities |
International measures of corruption are considered in the design and implementation of programmes and ODA activities The capacity and capability of officials and agencies involved in programmes and activities is adequately assessed and reflected in the design of activities |
There is a high degree of transparency and accountability around funding applied to ODA activities |
Contracting and procurement systems cannot ensure suitable public sector accountability, value for money, openness, fairness, integrity or effectiveness leading to a loss of confidence in NZAID as the best vehicle for the management of New Zealand’s ODA |
All areas of weakness identified by Audit New Zealand in their audit of NZAID procurement and contracting are being systematically and comprehensively addressed |
The annual audits of NZAID’s procurement and contracting control environment by Audit NZ shows that NZAID is making satisfactory progress towards addressing areas of weakness identified in September 2007, or have been adequately addressed |
Rapid growth of ODA funding and pressure to meet ODA expenditure targets may lead to poor decisions around the design and implementation of activities |
Funding increases to bilateral programmes are identified 12‑24 months before they come on stream so that NZAID can bring on programme staff and design new activities in a timely fashion |
NZAID activity evaluations consistently report successful development outcomes |
Rapid growth of ODA may lead to pressures on staff, structures and systems in NZAID |
The Agency commits to monitoring and reviewing, as necessary, staffing levels and structures to identify and address pressure points |
There is a smooth transition to any new staffing arrangements, structures and application of updated systems resulting from increased funding |
Inability to recruit or retain staff of sufficient calibre |
Potential difficult areas of recruitment are identified and recruitment initiatives developed to address concerns. Staff exits are monitored to identify any retention issues |
Staff turnover and average tenure are within public sector norms Time to fill vacancies generally does not exceed three months, excluding any delay incurred to obtain a security clearance, and less than 10 percent of positions require |
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