Financial Risks 2026-27
Argyll and Bute Council · 18 August 2026
Back to Argyll and Bute HSCP Finance and Policy Committee — 18 August 2026 and its agenda
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1 Finance & Policy Committee Date of Meeting: 18 August 2026 Title of Report: Financial Risks 2026-27 Presented by: James Gow, Head of Finance The Finance & Policy Committee is asked to: • Consider the 2026/27 financial risks identified and note the mitigations. • Note the risk relating to the SLA is a strategic risk and has been included in the financial forecast. 1. EXECUTIVE SUMMARY 1.1 The regular review of Financial Risks is an embedded aspect of financial governance. Each risk identified has been classified as to its likelihood and quantified within a range. The register outlines the mitigations in place to manage the likelihood of the risk occurring or the consequences. 1.2 1.3 In total 6 risks which have a potential impact greater than £100k are included, these present a risk for the current year beyond the approved budget and forecasts, with the exception of the SLA risk which is included in the financial forecast although there is still substantial uncertainty about the quantum and approach to managing it. The risks have been quantified at £2.3m plus a further £10m for the SLA. The HSCP has limited funds left in reserve which it is able to use to contribute to the management of the risks (excluding the SLA) to the extent that they materialise. In the longer term, financial sustainability and public funding remain a very high graded strategic risk for the HSCP. 2. RECOMMENDATIONS 2.1 The Finance and Policy Committee is recommended to: • Consider the 2026/27 financial risks identified and note the mitigations. • Note the risk relating to the SLA is a strategic risk and has been included in the financial forecast. 3. DETAIL OF REPORT 3.1 For each risk, the likelihood has been estimated based on the matrix below:
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2 Likelihood Probability applied Financial Range Quantified as 1 Remote 0% £100k - £300k £200k 2 Unlikely 10% £300k-£500k £400k 3 Possible 25% £500k-£1.5m £1.0m 4 Likely 50% Over £1.5m £2.5m 5 Almost Certain 75% 3.2 Alongside each risk there is an update on the current position and mitigations to manage the likelihood of the risk occurring or impact. There are risks where monitoring can take place but are difficult to mitigate and not within the control of the HSCP, such as risks associated with inflation, employer costs and levels of service demand. 3.3 The financial risks identified are detailed in Appendix 1 and summarised below: Likelihood / Range Remote Unlikely Possible Likely Almost certain Total £100k - £300k £300k - £500k £500k - £1.5m 1 4 5 >£1.5m 1 1 Total 0 0 1 4 1 6 3.4 By applying the weightings, the total estimated financial impact of the identified risks sits at £2.3m over and above the current financial forecast. 3.5 3.6 The main risks identified relate to the savings programme, children’s external placements, agency staffing and the potential additional costs to mitigate the impact of commissioned service provider failure in the care at home service. Pay awards have been settled for the current year and are therefore not perceived as a risk until the commencement of the 2027/28 year. The risk in respect of the SLA is reported in detail elsewhere but is included in this report for completeness. This has escalated beyond a level which can be managed locally within existing resources. The medium-term risk relating to financial sustainability remains as a very high or red graded risk. There are risks associated with public sector reform that could have financial implications. At the time of writing no firm proposals have been published by the Scottish Government beyond the move towards sub-national planning within the NHS. Locally work on the Single Authority model is progressing. 4. RELEVANT DATA AND INDICATORS 4.1 Financial risks have been identified based on known potential cost pressures which are not included in the budget or forecasts. Finance staff are engaged in sector networks to help identify emerging risks.
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3 5. CONTRIBUTION TO STRATEGIC PRIORITIES 5.1 Financial risks relate to the delivery of service to meet strategic and operational priorities. 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – Each financial risk has been assessed as to its estimated impact. Any overspending has governance implications and is a financial risk to both partners as well as the IJB. This report again highlights the financial aspect of the SLA cost increase from Greater Glasgow and Clyde. The HSPC is clear that it does not consider that it is in a position to manage this in the current year. It is therefore reported as a forecast overspend to NHS Highland. The alternative would require emergency measures to reduce spend in-year. 6.2 Staff Governance – there are staff governance implications associated with several of the risks as these relate to mitigations in respect of commissioned service failure or the requirement to cover vacancies with temporary staff. 6.3 Clinical Governance – as above, fragility of some services and lack of stable staffing has clinical governance implications. 7. 7.1 8. PROFESSIONAL ADVISORY There are no recommendations which require to be consulted on with Professional Advisory leads. EQUALITY AND DIVERSITY IMPLICATIONS 8.1 None directly. 9. 9.1 10. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE None. RISK ASSESSMENT 10.1 Financial risks are detailed within the report. 11. PUBLIC AND USER INVOLVEMENT AND ENGAGEMENT 11.1 None directly. 12. CONCLUSIONS 12.1 This report summarises the key perceived financial risks facing the HSCP in the current year. There are 5 risks identified with a potential adverse impact of £2.3m not included in the budget or forecast. Additionally the risk associated with the SLA with Greater Glasgow and Clyde is estimated at £10m. This is included in the financial forecast but is also reported here due to the uncertainty in terms of the value and the approach to managing it. The
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4 other risks will require to be managed through use of reserves and identification of further savings in the first instance. 13. DIRECTIONS Directions required to Council, NHS Board or both. Directions to: tick No Directions required √ Argyll & Bute Council NHS Highland Health Board Argyll & Bute Council and NHS Highland Health Board 14. PREVIOUS REVIEW OF THE REPORT Meeting Title of report Date Output (if relevant) N/A APPENDICES: Appendix 1 – Financial Risks 2026-27 AUTHOR NAME: James Gow, Head of Finance EMAIL: james.gow@argyll-bute.gov.uk