Agenda item

Report by the Chief Operating Officer.

16.1     The Chief Operating Officer introduced the report. The report incorporates the latest risk register and outlines the changes since the last strategic risk monitoring report. Section 3 of the report outlines the risk management process.

Schools

16.2     The Committee noted that the risk register has two risks concerning schools but neither appears to be concerned with the long term funding of small schools. The Committee understands that the national funding formula cut off is around 150 pupils, but there are many smaller schools which may get into financial difficulties. This is a risk to the budget of the whole Council as there is a potential impact on capital spending for schools, and an increase in the school transport budget if children have to travel further to school.

16.3     The Committee would like more information on how many schools may be affected, the nature of the problems they may face and how the Council is planning to address this issue. Although this risk may be on the departmental risk register, the Committee would like more detail on why the Council is satisfied that the risk is being controlled.

16.4     The Chief Finance Officer responded that work has been undertaken to model the impact of the proposed changes to the national funding formula based on discussions with Children’s Services.  The Chief Operating Officer advised that the implications of the national funding formulae would be considered as part of the Reconciling, Policy, Performance and Resources (RPPR) planning process. The Committee’s view on the risk to small schools being on the corporate risk register will be referred to the People Scrutiny Committee.

16.5     The Committee commented that the risk to small schools should be on strategic risk register until an assessment has been completed and the Audit Committee is assured that mitigation measures are in place. The work that is being undertaken should be summarised in the mitigation column of the risk register, where it is visible to Members. The Committee recommended that the funding risk to small schools is added to the strategic risk register.

Cyber Attack

16.6     The Committee asked if the Council has the capability to react rapidly to a Cyber-attack. The Chief Operating Officer responded that the Council is well prepared and its information management practices are strong. However, there is always a first organisation to be subject to a new threat. The Chief Operating Officer gave reassurance that the Council has the controls in place to protect the Council’s and residents’ information.

Disorderly Brexit

16.7     The Committee commented that Brexit is not mentioned on strategic risk register if there is a disorderly exit. There is a risk from an adverse currency fluctuation and higher inflation, plus an impact on ports. Therefore, a disorderly Brexit should be on the strategic risk register. The Chief Operating Officer responded that the Brexit risk had been considered but further review was required to define the risk and mitigations. At present it is difficult to put in place mitigations when the actual impacts remain unknown. However, the Committee’s comments have been noted and this risk will be will revisited in November.

16.8     The Committee considered that November is too late to start work on this issue and would like assurance that this work is going on now. The Brexit timeframe is very tight and it is not ideal for it not to be on the register until we have a fully informed approach. Although the Council may not know what the exact impacts will be, it is likely to have impact on the economy and cause transport disruption. The Committee accepts that is difficult to model impacts, but it is better to have made an assessment and examined what the mitigations might be.

16.9     The Committee outlined that the impact of higher inflation and currency fluctuations, plus the impact on ports are the most likely outcomes of a disorderly Brexit. The Committee suggested that it might to helpful to focus on specific areas of risk such as:

1. A break down in the supply chain for the Council’s suppliers and local businesses;

2. Blockages to the transport system especially at ports (e.g. Newhaven).

3. The cost inflation impact on staffing and suppliers of an adverse currency fluctuation and higher inflation.

16.10   The Chief Operating Officer explained that the Procurement Team has taken these impacts into account. The fact that Brexit is not on the strategic risk register, does not mean officers are not working on this. However, he accepted the point that the Committee is making about the visibility of the work being undertaken to Members.

16.11   The Committee agreed that it would be good to idea to have a report in November on the impact of a disorderly Brexit, so that the Committee can be assured that work is being undertaken on mitigating the specific impacts. So the risk is defined, quantified and assessed as far as is possible.

Risk Management Framework

16.12   The Committee commented that the strategic risk register contains two types of risk. Some are external factors and some arise due to the failure to do something. In terms of the strategic risk register it would be helpful if officers could include work that is being undertaken, as it is not currently visible to Members. The Committee does not want the risk process to obscure the work that is being undertaken and would like the process to reflect the work that is underway that may not appear on register.

16.13   The Committee RESOLVED to:

1) Recommend that the financial risk to small schools is added to the strategic risk register; and

2) Have a report on the risk arising from a disorderly Brexit at the November meeting, and recommend that it is added to the strategic risk register.