Good risk management is now more vital than ever for the public sector, writes Gemma Rogers

For the first time since 1998 the UK government has used its powers to cap the spending plans of various public sector organisations across the country. So-called 'excessive budgets' in recent years have resulted in its decision to designate six local authorities and one fire authority for capping of this year's council tax increases. Seven more, including police and fire authorities, are nominated for capping next year.

Local government leaders have deemed the caps expensive and unnecessary, and residents are infuriated at the expected additional costs of re-billing for this year's council tax, and at the impact of budget reductions on front-line services. But despite these protestations, the local authorities of Nottingham, Herefordshire, Telford and Wrekin, Torbay, Fenland and Shepway, and Hereford and Worcester fire authority are all facing a tough year ahead with fewer funds and resources than they were expecting. Cumbria, West Mercia and Northamptonshire police forces and Nottinghamshire, Bedfordshire, Durham and Essex fire authorities are lined up for capping next year.

ALARM - the national forum for risk management in the public sector - is active in promoting effective risk management for public sector organisations, helping them to identify risks and developing solutions for managing them.

This can be a tall order even for organisations with plentiful supplies, but public sector organisations are not often blessed with never-ending resources. Meticulous planning and budgeting are vital and they often face the struggle to do more with less.

ALARM believes that the plans to curb town hall spending mean that local authorities, police, fire and rescue crews and a whole host of other vital public service providers now need to manage their risks more than ever.

Budget reductions will be a threat to services, and it is vital that such organisations know how to manage the growing number of risks they now face, and can justify the prioritisation of valuable resources.

Identifying and managing risks as an integral part of corporate planning and strategic budget setting are essential for helping organisations to better manage the drive for improved service provision in the public sector.

If these organisations have fewer resources than expected, due to capping, risk management becomes more important than ever.

Strategic risk management can demonstrate a robust approach to prioritising competing demands, and allows consideration of the risks associated with those choices. Control of those risks via removal or mitigation techniques can then be identified and implemented.

Recent studies have shown that risk management is finally receiving the attention it deserves among many more public sector organisations. Councils, fire and rescue crews and police constabularies, for example, are more enlightened about the benefits of integrated risk management and are learning to manage their exposures more effectively. But there are still some organisations which see risk management as a sticking plaster solution, and believe that 'worrying about it when it happens' is an acceptable approach.

In today's unstable political, social and economic climate, large scale risks are more likely to occur, so the most sensible approach is to ensure that the risks are dealt with in the first place. Public sector organisations simply cannot afford to be unprepared, and a robust risk management approach is one of the best ways to ensure this.

ALARM chairman Bob Cope comments: "Unexpected losses have always been a major threat to the on-going viability of an organisation's services and their significance is increased when resources are limited or capped, as we are now seeing. Such risks need to be addressed now more than ever.

"If council chiefs are facing a reduction in resources from what they had last year or what they expected, anything out of the ordinary which has not been planned for could seriously damage the services they are expected to provide. Council services, fire and rescue services and health services, are not things we can simply do without for a while. They are essential to community stability and well-being and must be provided at all times, whether during an emergency or not.

"Capping will make this more difficult, but as long as there are no unforeseen risks councils can still manage. But failing to identify and manage these risks could spell real disaster."

Gemma Rogers wrote this in association with ALARM, Tel: 01395 223399,