30/6/2010

By Graham Buck

Local authorities’ robust risk management controls may be undermined in the new era of cost-cutting, a major insurer has warned.

A company such as BP can spend millions on rectifying a problem when risk management fails, but local authorities don’t have the same luxury says Neil Hardie of Zurich Municipal.

Hardie, who spoke at this week’s annual conference in Southport of the public risk management association ALARM, also urged local authorities to review their risks associated with the 2012 Olympics.

“Many regard this as a London event, yet events are scheduled to take place all over the country,” he told delegates. “If things go wrong and aren’t handled well, the television cameras will be there to record it.

“This could also prove very detrimental to inward investment, and have ramifications for years to come.”

Colleague David Forster said that evidence of risk management departments having to do more with fewer resources was provided at the recent conference of the Chartered Institute of Public Finance and Accounting (CIPFA), which polled 100 finance directors and asked if they were planning budget cuts over the coming year.

Responses showed 83% of those polled said their organisation planned to downsize and restructure over the next 12 months. However, while all agreed that the cutbacks would involve job losses 43% said the reduction in headcount would be no more than 5% to 10%.

Forster added that risk managers should consider adopting a “resilience” approach in the new era of austerity. He described this as “the ability to survive and thrive in the face of unexpected events and a changing risk landscape”.

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