Strategic Risk Register Update
Argyll and Bute Council · 29 January 2025
Back to Argyll and Bute HSCP Integration Joint Board (IJB) — 29 January 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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1 Integration Joint Board Date of Meeting: 29 January 2025 Title of Report: Strategic Risk Register Presented by: James Gow, Head of Finance The Audit & Risk Committee is asked to: • Note that the Strategic Risk Register has been reviewed by the Leadership Team and the Audit & Risk Committee. • Review and approve the Strategic Risk Register. • Note the Strategic Risk Register has been considered against the Strategic Objectives 1. EXECUTIVE SUMMARY 1.1 An important element of effective Risk Management is to regularly review the Strategic Risk Register (SRR). The Audit & Risk Committee undertake this on behalf of the IJB. This report recommends changes to the SRR to reflect perceived increasing risk. The changes reflect a perceived worsening of the operational context facing the HSCP and have been discussed and agreed by the leadership team. 1.2 The leadership team is recommending that the number of ‘very high’ graded risk is increased by one as there is a perception that risks associated with support services have increased to the extent that this should now be rated as a red risk, the rationale for this assessment is described in the report. This report also seeks to address an internal audit recommendation for improvement in the way in which the HSCP considers risk relating specifically to its strategic objectives. 1.3 Detailed discussion at the Audit & Risk Committee also highlighted the inter- relationships between many of the risks on the register. This, in part, is reflected in the general upward trend in the assessment of residual risk. 2. Recommendations 2.1 The Integration Joint Board is recommended to: • Review and Approve the Strategic Risk Register.
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2 3. DETAIL OF REPORT 3.1 The Risk Register is used to identify risks, assess their perceived likelihood and impact and outline how they are being mitigated. It is a dynamic document and is reviewed by the IJB twice annually. The current version is attached as appendix 1. The Register describes 21 strategic risks facing the HSCP. The table below summarises the number and assessment of perceived residual risks: Residual Risks Very High High Medium Total May 2021 2 9 9 20 June 2022 4 14 6 24 June 2023 4 13 7 24 June 2024 5 15 1 21 December 2024 6 15 0 21 The total number of risks have been reduced with some consolidated post pandemic. The main change now suggested is that the risk in respect of support services is increased to ‘very high’. This relates to a series of challenges that the HSCP is facing at present: • HR Management - the management team no longer has a dedicated, integrated HR representative as part of its structure. Qualified HR support is often not available when decisions are being considered and made. Additionally, the absence of such a role places additional pressure on service managers and heads of service to manage HR issues independently. Effective HR management is key to change management and the situation impacts on transformation planning and delivery. The HSCP is continuing to work with both partners to seek a resolution. • Support Services – previous savings programmes, staffing shortages within teams and system changes are all placing additional pressure on support teams. This is now resulting in service risk across Social Work and Social Care support services, including child and adult protection and finance processes. 0 2 4 6 8 10 12 14 16 Residual Risk Trend Medium High Very High
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3 This issue has been discussed at length and it is the opinion of the management team that it should be escalated in the risk register. Addressing the risk is complex as the HSCP relies on partners for some support services it depends upon. However, there are aspects of managing this risk that sit with the management team and it is expected that some essential recruitment will be required urgently to address the risk, despite the lack of financial resource. The draft Scottish Budget was published in early December 2024, at the time of writing the implications of the budget are not well enough understood to enable any reduction in financial sustainability or other risks to be recommended at this stage. It is clear that there is additional funding being made available but much of this will be required to fund pay increases, the increase in the minimum wage and potentially National Insurance increases for employers. The Scottish Government have also signalled an end to current brokerage arrangements within the NHS, this is a concern in respect of the HSCP and NHS Highland’s financial position. 3.2 The risk register incorporates an indicator which illustrates the perceived direction of each risk, the six ‘Very High’ risks are: Financial Sustainability (SSR01) The underlying budget gap for 2025/26 is substantial and the most recent modelling outlines a series of risks relating to funding and costs as well as severe challenges facing public funding. It is recommended that this risk remains very high but will be kept under review. Sustainability of Commissioned Service Providers (SSR08) This risk remains very high as a number of service providers continue to struggle to recruit staff and deliver the services they are contracted to. Several are also requesting unaffordable uplifts in contract values. Work is on-going to provide additional support and change ways of working, particularly for care at home services. It is difficult to estimate the impacts the actions taken by the HSCP have had but it is likely that some services have been protected that would have otherwise been withdrawn, this has come at a financial cost. The increase in the employer national insurance rate is adding to this risk. There will be a 5% increase in the minimum pay rate for commissioned service staff to £12.60 per hour, this may be of some help in mitigation of this risk. Workforce Recruitment and Retention (SSR11) The HSCP continues to experience difficulty in recruiting staff to a variety of roles. Staffing is a constraint on service delivery in some areas. This risk is both a local and a national one, however the ageing and reducing population and the housing emergency provide an increasingly difficult local context. The Workforce group is meeting regularly and is in the process of implementing the Workforce Strategy. The HSCP is also seeking to improve accommodation options in the most challenging localities. However, the perception is that the problem is not improving and some agency and locum rates are increasing. Socio-Economic Situation & Increasing Poverty (SSR21) This risk continues to be considered as very high and has multiple strands. It is largely outwith the influence of the HSCP. It is expected that the cost of living
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4 crisis will continue to drive increased poverty and deprivation and service demand. The HSCP is also experiencing increased costs and reduced real terms value of resourcing. Recent public health publications and performance data support this evaluation of the risk. The growing impact of poverty, deprivation and exclusion is perceived to be being exacerbated by the impact the lockdowns have had upon some of the most vulnerable in society, particularly those with mental health issues and some children. Infrastructure and Assets (SSR07) Significant backlog maintenance requirements have been identified and it is clear there is insufficient funding available to address these although some additional capital has been announced in the Draft Scottish Budget. Additionally, there are excess requests for equipment replacement across the NHSH area and insufficient funding for digital infrastructure replacement and development. The HSCP cannot fund capital investment from its reserves, this risk to a large extent is therefore not in the control of the HSCP and is the responsibility of partners. The risk of building failure in the short term is perceived to be increasing but there is an improved understanding for the problem and a recognition that assets require investment. Communication with both partners is on-going and the HSCP is contributing to investment plans. Mitigations are in place and works are planned or progressing within some buildings. Support Services (SSR 16) It is recommended that this risk is increased to very high as described above. 3.4 Risk management within the HSCP relies heavily upon processes and procedures within the partner organisations, particularly in respect of cyber security, data protection, infrastructure replacement and financial processes and systems. Recent Cyber Security breaches within the NHS further highlight the growing and strategic nature of this risk. 3.5 Audit Recommendations The Risk Management Strategy has been reviewed and risk management training is now being implemented across the HSCP over a 4 week period. There is now additional focus on operational risk management and how this relates to the Strategic Risk Register. Relevant staff are engaging well with this process at present. These actions are addressing outstanding risk management audit recommendations. Additionally, the Internal Auditor made a risk management recommendation within the audit of the Joint Strategic Planning process: ‘Risks - The JSP outlines financial risks and challenges, with mitigation factors identified. However, the plan lacks clarification on how these risks might specifically impact the delivery of the JSP itself. Moreover, although the Health and Social Care Partnership (HSCP) maintains a Strategic Risk Register to address potential failures of the overall plan,
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5 there is no dedicated register for risks associated with individual JSP priorities and objectives.’ The HSCP agreed with the recommendation and agreed to consider how it addresses it. Upon further reflection, there is perhaps limited value in having a separate risk register in addition to the Strategic Risk Register (SRR). The SSR should capture all of the strategic risks facing the HSCP which would include risks that relate to the Strategic Objectives. Appendix 2 provides a summary of the Strategic Objectives in the current Joint Strategic Plan and outlines specific risks relating to each of these objectives. These key risks are then mapped to the SRR to provide assurance that the underlying risk factors are included where appropriate. Additionally, the SRR has a specific risk relating to the delivery of the Strategic Objectives. 3.6 Risk Appetite An IJB development workshop was held in October 2023 to develop the risk appetite for the HSCP. The main purpose is to ensure that the management understanding of risk appetite aligns with the IJB’s as summarised below: RISK APPETITE RATING Risk Grouping 0 1 1.5 2 2.5 3 3.5 4 Operational Risks Strategic Risk Legal / Regulatory Financial Development & Innovation Clinical & Care People & Workforce Reputational The risk appetite ratings quantitively indicate that there is a willingness within the IJB to accept higher levels of risk relating to strategic change, innovation and workforce. This reflects a recognition through the IJB and HSCP that there are significant drivers for change and transformation. It is also clear that the IJB has a lower appetite for clinical, legal / regulatory and financial risks. It is recognised that the Risk Appetite requires to be reviewed and refreshed in light of the changing context. 4. RELEVANT DATA AND INDICATORS 4.1 The identification and rating of risk is based on internal and external data and indicators as well as a wider environmental scan. 5 CONTRIBUTION TO STRATEGIC PRIORITIES 5.1 Robust risk management is an important aspect of the overall strategic management of the HSCP. This report also seeks to ensure that risks relating to strategic objectives are adequately reflected in the SRR.
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6 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – This report outlines a need for the HSCP to change the way it operates in order to remain financially sustainable. 6.2 Staff Governance – the current lack of strategic and operational HR support within the needs identified has a potential impact on leadership and management time. 6.3 Clinical Governance – There would be potential impact in clinical/care delivery as a consequence of the management of the risks outlined in the SRR 7. Professional Advisory 7.1 Professional leads are embedded in operational and strategic risk management processes. 8. EQUALITY & DIVERSITY IMPLICATIONS 8.1 None arising directly from the contents of this report but it is considered that the implications of measures that may be required to achieve a sustainable financial position will have an impact upon people with protected characteristics. 9. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE 9.1 Note a systems risk with the changeover from Datix to Inphase which will be updated to committee in a separate paper 10. RISK ASSESSMENT 10.1 This report provides a detailed review of the strategic risks facing the HSCP. 11. PUBLIC & USER INVOLVEMENT & ENGAGEMENT 11.1 None arising directly from this report but again the implications of efforts to achieve a sustainable financial position may result in increasing risk in terms of the implementation of the HSCP’s engagement strategy. 12. CONCLUSIONS 12.1 Overall the risk environment facing the HSCP remains challenging and is perceived to be worsening. Finance and staffing issues continue to be perceived as the main challenges. The local assessment aligns well with the national picture with recent reports published by Audit Scotland providing independent evidence. The implications of the budget are yet to be fully understood, this will likely assist the financial position to some extent but is not expected to fully address the financial sustainability issues facing Health and Social Care. 12.2 This report also provides the IJB with an opportunity to review the Risk Appetite and the HSCP approach to ensuring its Risk Management processes align with the Strategic Plan and Strategic Objectives.
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7 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) SLT Strategic Risk Register Review 04/12/24 Changes outlined in paper agreed Audit & Risk Committee Strategic Risk Register Review 17/12/24 Approved and agreed that Risk Appetite is to be reviewed during 2025. Inter-relationships between risks to be noted. REPORT AUTHOR AND CONTACT James Gow, Head of Finance : james.gow@argyll-bute.gov.uk Appendix 1: Strategic Risk Register Appendix 2: Risk Mapping – Strategic Objectives