Strategic Risk Register
Argyll and Bute Council · 25 September 2024
Back to Argyll and Bute HSCP Integration Joint Board (IJB) — 25 September 2024 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: 25 September 2024 Title of Report: Strategic Risk Register Presented by: James Gow, Head of Finance The Integration Joint Board is recommended to: • Note that the Strategic Risk Register has been reviewed by the Leadership Team and the Audit and Risk Committee. • Note that it is recommended that Infrastructure Risk is added to the very high Strategic Risks. • Review and approve the Strategic Risk Register and Risk Appetite. 1. EXECUTIVE SUMMARY 1.1 An important element of effective Risk Management is to regularly review the Strategic Risk Register. The Audit & Risk Committee undertake this on behalf of the IJB. This report recommends changes to the Register to reflect perceived increasing risk and also seeks to reduce the overall number of risks described within it. These changes have been endorsed by the Audit & Risk Committee. 1.2 The Scottish government have published the budget for 2024/25 and confirmed that capital funding will be reduced with projects delayed or cancelled and a ‘do minimum approach’ to focus on maintenance of existing assets, this is one of the drivers for increasing the risk associated with infrastructure. As a consequence of the financial circumstances and potential response across the system, it is perceived that a number of strategic risks are increasing. It is also recognised that there are perhaps too many strategic risks and this report suggests 2 options for streamlining the risk register. 2. Recommendations 2.1 The Integration Joint Board is recommended to: • Review and Approve the Risk Register and Risk Appetite. • Endorse the categorisation of Infrastructure Risk as ‘Very High’. 3. DETAIL OF REPORT 3.1 The Risk Register is used to identify risks and assess their perceived likelihood and impact. It is a dynamic document and is reviewed by the IJB twice annually. The current version is attached as appendix 1. The Strategic Risk Register
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2 describes 21 strategic risks facing the HSCP, once the two risks which are being suggested for removal are excluded. The table below summarises the 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 January 2024 4 14 5 23 August 2024 5 15 1 21 It is suggested that the risk relating to vaccinations should be removed as this is now business as usual albeit at a higher level of activity than previously. Additionally, it is suggested that the risk relating to contingency planning and resilience is incorporated within the Governance risk to reflect the mainstreaming of this activity within SLT, the increased participation in training and scenario events, updating of the on-call guidance and embedding of the category 1 responder status. The Scottish Budget and subsequent further deterioration in the public finances are indicators that a number of risks are increasing: • Financial Sustainability - uplifts were less than assumed for the NHS and there remains system wide financial sustainability concerns which appear to be worsening during the current year; • Industrial Relations and Workforce – the SG budget plans for reductions in the public sector workforce and there are restricted funds for 2024/25 pay awards. The trade off appears to be between increased pay offers to reduce industrial relations risks and additional in year cuts to fund the excess costs. There is also a risk in respect of the differential between the current offers for the two largest staff groups; • Delivery of Strategic Objectives – the consequences of the budget and the response across the whole of the health and social care system is such that the risk the HSCP will not be able to deliver on its strategic objectives is perceived to be increasing; and • Infrastructure – the capital programme is being reduced, one project has been delayed and there is insufficient capital funding to address backlog maintenance and replacement requirements across buildings, equipment and digital infrastructure. This risk has been upgraded to very high. 3.2 The risk register incorporates an indicator which illustrates the perceived direction of each risk, the five ‘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, the outlook has been described as ‘bleak’. It is recommended that this risk remains very high. A separate risk, SSR01(b) has been added to reflect the short term position separately.
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3 In response to concerns raised by the IJB, the HSCP is seeing to identify and consult on budget / savings proposals to address the risk earlier than it has in the past to enable better consultation. Other mitigations in place include greater scrutiny of vacancies and consistent efforts to reduce usage of agency staffing. The HSCP continues to engage with both partners and national value initiatives. Sustainability of Commissioned Service Providers (SSR7) 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. There are however examples where the HSCP has not been able to support provision on a sustainable basis but has been able to step in to ensure withdrawal or transfer of service was managed as smoothly as possible. There are providers who have indicated that services are at risk in the near term, service management continue engage with providers and consider the implications and alternative approaches. Workforce Recruitment and Retention (SSR10) The HSCP continues to experience difficulty in recruiting staff to a wide variety of roles. Staffing is the main 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 a particularly difficult local context. The Workforce group is meeting regularly and is in the process of implementing the Workforce Strategy. This is also being taken into account by the Infrastructure Transformation Board as it seeks to improve accommodation options in the most challenging localities. The use of agency staff as a mitigation remains the biggest threat to financial performance. Socio-Economic Situation & Increasing Poverty (SSR24) 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 crisis will continue to drive increased poverty and deprivation and service demand. The HSCP is experiencing increased costs and reduced real terms value of its resourcing. The ability of the Scottish Government to fund these pressures is concerning. Recent public health and performance data support this evaluation of the risk. The 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 groups of children. Infrastructure and Assets (SSR06) Significant backlog maintenance requirements have been identified and there is insufficient funding available to address these. 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.
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4 The risk of building failure in the short term is perceived to be increasing and the lack of a replacement strategy adds to this as business case work is halted (NHS). Communication with both partners on this topic is on-going. Mitigations are in place and works are planned or progressing for some of the care home estate. A detailed report has been considered by the Finance and Policy Committee and the Infrastructure Board where the evaluation of this risk as ‘Very High’ was endorsed. 3.4 Risk management within the HSCP relies 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 public sector further highlight the growing and strategic nature of this risk. Work is on-going to better integrate the Strategic Risk Register with service owned risk registers. 3.5 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 board 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. 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. 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – None
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5 6.2 Staff Governance – None 6.3 Clinical Governance – None 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 mitigate a variety of risk and achieve a sustainable financial position will have an impact upon people with protected characteristics. 9. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE 9.1 None. 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 have worsened as a result of the funding outlined by the Scottish Government. The financial outlook combined with service pressures and workforce challenges continue to create significant risk. There are system wide drivers for change which are, if anything, more acute locally due to demographics. 12.2 The Risk Appetite is also provided for further review. The HSCP is in the process of streamlining the Strategic Risk Register and improve operational risk management processes and systems. 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
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6 14. PREVIOUS REVIEW OF THE REPORT Meeting Title of report Date Output (if relevant) SLT Strategic Risk Register Review 05/06/24 Changes endorsed and wording strengthened in respect of impacts of increasing poverty. Audit & Risk Committee Strategic Risk Register Review 18/6/24 Amendments to Strategic Risk Register Endorsed REPORT AUTHOR AND CONTACT James Gow, Head of Finance : james.gow@argyll-bute.gov.uk Appendix 1: Strategic Risk Register