Agenda item

This report provides an update on the Council’s Strategic Risks as of March 2025. The update has been prepared in consultation with risk leads and Departmental Management Teams and summarises the risks that are considered to be of an impact and/or likelihood of materialising, and which may have an adverse effect on the achievement of the Council’s corporate objectives.

Darren Armstrong (Deputy Director Organisational Assurance & Resilience) introduced a report from the Corporate Director Finance & Resources providing the Committee with an update on the Council’s Strategic Risks as of March 2025.

In considering the report the Committee noted:

·             The Strategic Risk Register had been prepared in consultation with risk leads, Departmental Management Teams and the Council Management Team in accordance with the key elements of the Council’s Risk Management Policy and Strategy. The report summarised the risks that were considered to have an impact and/or likelihood of materialising, and which may have an adverse effect on the achievement of the Council’s corporate objectives.

·             Since the report was last updated in September 2024, the Council had continued to operate in a heightened risk environment due to various external factors with the Council’s overall risk profile therefore continuing to reflect the challenging risk environment the Council was operating within and eight of the fourteen strategic risks currently outside their target risk score.

·             The importance of risk management as a core element of the Council's corporate governance framework with the Strategic Risk Register owned collectively by the Council Management Team (CMT) and each risk being assigned a Corporate Director as risk sponsor and the report provided via the ‘bottom-up’ provision of risks from services and departments, which were deemed to require consideration at the higher level along with direct input via CMT with its purpose to identify, assess, and control risks that could hinder the achievement of Council objectives. The Council's approach, including the Strategic Risk Report, was closely aligned with the Borough Plan priorities and supported decision-making, business planning, and performance management.

·             In terms of key themes identified, members were advised specific attention had been focussed on the following risks:

o      Risk A: Lack of Affordable Accommodation – with the Housing Needs Service having seen a 33% increase in demand from families and single people who are either threatened with homelessness, or homeless from 2021/22 to 2023/24;

o      Risk B: Cost of Living Crisis – with this continuing to be one of the Council’s highest scoring risks reflecting that demand for support from Brent Hubs remained high in relation to Housing, Council Tax Support and RSF applications, food and fuel aid enquiries, housing and homelessness enquiries, Council Tax, welfare benefits and other presented needs such as, housing benefit, debt and money enquiries, employment, general support and immigration and the overall trend remaining upward.

o          Risk C – Increase in Dedicated School Grants High Needs Block Deficit – with this also continuing to be of the highest scoring risks.  The DSG had carried a deficit balance since 2019-20 and the cumulative balance carried forward from 2023/24 being £13.2m.  The current in year DSG forecast deficit of £0.4m would increase the overall deficit to £13.6m.  Work continued to manage pressures against the High Needs Block of the DSG, with the statutory override now extended until 2025/26.  Concerns continued to be raised, however, with the government about the sustainability of the current national SEND system and whilst national reforms were anticipated it was not yet known how they may impact on Brent.

o      Risk H – Financial Resilience and Sustainability – with this risk score having increased since the last update in September following the 2025-26 budget setting process and significant risks, issues and uncertainties with regards to the Council’s Medium Term Financial Strategy (MTFS) caused by high levels of inflation and interest rates, low growth in the economy, increased demand for key services, the effects of the cost-of-living crisis and uncertainty in government funding.

·             In terms of the main changes since September 2024, 10 of the risks reported were assessed as being on a stable risk trend in terms of scores remaining as previously reported and one risk (Strategic Risk H: Financial Resilience and Sustainability) having shown an upward trend and three risk presenting a downward trend (Risk G: Cyber Attacks, Risk J Recruitment & Retention and Risk L Safeguarding Incident Adults).

·             The Committee’s attention was drawn to the Strategic Risk Heat Map within the Strategic Risk Report which had shown seven of the strategic risks located within the upper quartile with the highest scoring being the risks related to lack of supply of Affordable Accommodation(A); cost-of-living crisis (B); increase in Dedicated Schools Grant High Needs Block deficit (C); risk to Community Cohesion (D); Climate Emergency (adapting to climate risks and reaching carbon neutrality) (E & F) and Financial Resilience and Sustainability (H).

·             Since the update in September 2024 no new risks had been added to the Strategic Risk Report with no risks having been closed or de-escalated to departmental level.

·             The new addition to the September 2024 version of the report of an enhanced action plan for each of the fourteen strategic risks.  Members were advised that in previous versions risk owners had outlined actions they intended to implement to further address the risk, however, there was previously no system to follow-up and track these actions and whether they have had a positive impact on managing and mitigating the risk, or not. The enhanced action plan now included a section to follow-up on actions that were previously outlined and assigned an action owner for increased accountability.  This change had been made following recommendations from the LGA and of the 81 actions identified in the last update it was reported that 30 had been implemented (37%); 49 (60%) were in progress and 2 had not yet commenced with 22 new actions also having been proposed with the need to maintain a longer term focus on monitoring activity and the outcomes being achieved in relation to the management of each specific risk also highlighted.

·             The wider improvements made to the Council’s risk management framework, as detailed within section 3.9 of the report with Grant Thornton as the Council’s External Auditor having commented in their 2024-24 Annual Report on the Council’s sound risk management arrangements and these also having been recognised through the LGA Corporate Peer Challenge.  These improvements had included a comprehensive review of the Council’s Risk Management Strategy to ensure robustness and alignment with governance processes and the addition of a risk appetite statement along with more detailed strategic risk tracking and further improvements  planned, including enhanced risk categorisation and a more integrated assurance plan.

·             In providing further details on the review of the Risk Management Strategy members noted this had been designed to support the Council’s approach to risk management ensuring a robust and consistent process for managing risks and opportunities.  This had included the addition of a risk appetite statement defining the amount and type of risk that the Council as an organisation was willing to take in pursuit of its objectives, which formed a key component of effective risk management. In outlining its development process, members noted that the Council’s risk appetite statement had been developed to strike a balance between the Council’s responsibility for managing risks against a need to work flexibly in delivering its strategic ambitions with six types of risks included that the Council would seek to avoid at all cost - risks rated red on the risk matrix that were avoidable other than in exceptional circumstances; risks which would result in harm to our residents, staff or any groups or individuals; risks that may cause harm to the environment; risks which would result in breach of laws or regulations; risks which would result in the Council becoming financially unviable and risks that would result in a long-term detrimental impact on our reputation.  Due to the significance and importance of the statement, it would be reviewed and refreshed at regular intervals, where necessary and independently to the overall strategy, to reflect changes in the Council’s risk profile with it confirmed that no changes had been made to the Council’s risk appetite statement during the current review period.

The Chair thanked Darren Armstrong for his report and before moving on to invite comments from the Committee took the opportunity to remind members of the role of Internal Audit in working with risk sponsors and nominated risk leads, in an advisory capacity, to coordinate and update the risk report as opposed to being the owner of specific risks.  If, as a result of any issues raised, further detail on specific risks/mitigations were required members were advised these would need to be sought from the relevant risk sponsor outside of the meeting.  On this basis, the following comments/issues were raised:

·             Further details were sought on the way target dates were determined in relation to specific actions relating to individual risks.  In response, members were advised that this included a process involving the individual risk lead and sponsor.

·             Referring to the cover report provided for the Committee, concerns were highlighted that the section detailing climate change and environmental considerations had not included any reference to the climate change risks included within the register.  In response, members were advised that this would be reviewed as part of the presentation of future reports with positive engagement identified with the risk leads on progress in delivery of the specific mitigating actions identified and these subject to regular review and update as part of the supporting Action Plan.

As a further query details were sought on the assessment of any risks associated with the proposals relating to devolution with officers confirming that at this stage no specific risks had been identified in relation to Brent given the proposed changes were currently focussed outside of London.  Should any impacts be identified as the proposals moved forward, however, these would be added to the register.

·             In addition to the role undertaken by the Committee in monitoring strategic risk, further clarification was sought on the approach towards managing risks at a departmental/operational level.  In noting the Committee’s focus around the management of risk at a strategic level across the Council and ability to commission deep dives around specific risks (if required), members were advised that each Council department would also be responsible for maintaining a departmental risk register to ensure that all operational risks were being effectively managed and to ensure that, where required, these were subject to regular and ongoing review to ensure risks could be escalated to the Strategic Risk Report via Corporate Management Team (CMT)CMT where appropriate.

As a follow up issue, details were sought on the approach taken towards assessing risk on the basis of wider national trends as opposed to specific issues unique to Brent.  Whilst highlighting that each authority would have their own specific risk management frameworks, confirmation was provided that risk registers and management frameworks were subject to comparison with other local authorities in order to share best practice and examine trends with many of the risks identified being as consistent across other councils.

·             Details were also sought regarding the process for assessing mitigating actions as having been completed with confirmation provided this would involve a self-certification process between the risk owner and risk sponsor and Internal Audit involvement where this was required to be substantiated.

·             In response to requests made for further detail on the mitigating measures in place to assess and manage any specific risks identified in relation to the increase in Employer National Insurance contributions and management of the relationship with external providers and partners members were advised these had been included for consideration as part of the strategic risk relating to the Councils overall Financial Resilience and Sustainability and would remain under close review

·             Members welcomed the development of the Risk Appetite Statement as a key part of the wider Risk Management Strategy including the focus on those risks that the Council would seek to avoid.  Members also requested that the Strategic Risk Heat Map and approach towards monitoring risks beshared with Scrutiny Chairs as part of their regular meeting with the Audit & Standards Advisory Committee Chair and Vice-Chair to ensure a co-ordinated approach between scrutiny and audit in relation to the monitoring of risks identified.

As no further issues were raised, the Chair thanked Darren Armstrong and his team on behalf of the Committee for their hard work and Committee RESOLVED to note the update on the Council’s strategic risks as of March 2025.