In compliance with Section 62 (1) (c) (i) of the Municipal Finance Management Act (MFMA) No. 56 of 2003, the Municipality has established a risk management unit within the office of the Municipality.
Enterprise Risk Management (ERM) forms a critical part of any institution’s strategic management. It is the process whereby an institution both methodically and intuitively addresses the risk attached to its activities with the goal of achieving sustained benefit within each activity and across the portfolio of activities. ERM is therefore recognized as an integral part of sound organizational management and is being promoted internationally and in South Africa as good practice applicable not to only in private sector, but also across the public sector spectrum, and this has been legislated as alluded to above.
The underlying premise of risk management is that every governmental body exists to provide value for its stakeholders. Such value is based on the quality of service delivery to the citizens. All institutions face uncertainty, and the challenge for management is to determine how much uncertainty the institution is prepared to accept as it strives to grow stakeholder value. Uncertainty presents both risk and opportunity, with the potential to erode or enhance value. Value is maximized when management sets objectives to strike an optimal balance between growth and related risks, and effectively deploys resources in pursuit of the institution’s objectives.
RISK MANAGEMENT POLICY STATEMENT
The Accounting Officer has committed the Newcastle Local Municipality (NLM) to a process of risk management that is aligned to the principles of good corporate governance as supported by the Municipal Finance Management Act no 56 of 2003, Public Sector Risk Management Framework published on 1 April 2010, COSO Integrated Risk Management Framework and other various pieces of legislation applicable to local government.
NLM recognizes that the management of risks is an integral part of sound management and therefore adopts a comprehensive approach to the management of risk. The features of this approach are outlined in the municipality’s Risk Management policy and Strategy.
This policy statement declares and affirms our commitment to sound risk management. It is expected that all departments, operations and processes will be subjected to risk management policy and related processes. It is the intention that our departments shall work together in a consistent and integrated manner with the overall objective of reducing risk to within the tolerance level.
Effective risk management is imperative to the NLM to fulfil its mandate, the service delivery expectations of the public and the performance expectations within the municipality. The realization of our IDP document depends on us being able to take calculated risks in a way that does not jeopardize the direct interests of stakeholders. Sound Management of risk will enable us to anticipate and respond to changes on our service delivery environment as well as make informed decisions under conditions of uncertainty.
Our commitment to ERM:
To ensure that all resources are applied economically and obtain the highest standards of service delivery.
To ensure that relevant risk policies are fully communicated to all employees and effectively integrated in their daily operations.
To ensure that significant risks that may impact NLM objectives are being continuously identified, assessed, managed, monitored and reported on.
To regularly monitor and review the progress being made in developing an appropriate risk management culture.
Every employee has a part to play in this important endeavour towards ensuring clean governance and efficient service delivery.
RISK MANAGEMENT INFRASTRUCTURE
Newcastle Municipality has developed and approved the following risk management policies and strategic documents to give effect towards the implementation of Enterprise Risk Management within the Municipality:
• Risk management policy
• Fraud and corruption policy;
• Risk Management Strategy; and
• Anti-corruption strategy and Fraud Prevention Plan
Our Risk Management policy and strategy have been developed based on the Public Sector Risk Management Framework issued on 01 April 2010 in terms of the COSO Framework on Enterprise Risk Management which provides the following eight interrelated ERM components also referred to as risk management processes:
RISK MANAGEMENT UNIT
To ensure effective, efficient, and sound system of risk management at Newcastle Municipality.
Risk Management Unit Structure
Key Performance Areas:
1. Supporting the management and implementation of all aspects of the risk function
2. Supporting Municipal departments and business units/programmes in the identification of new/emerging areas of risk or significant changes in risk profile and recommend courses of action.
3. Provide management support to managing category risks.
4. Create and embed a risk aware culture.
5. Provide continuous support on implementation of the Municipality’s fraud prevention strategy, risk and compliance frameworks and guidelines.
6. Assist the Municipality in implementing and maintaining a conducive internal control environment towards ensuring an effective, efficient, economical and equitable service delivery.
7. Provide support and counsel senior management within the risk management unit.
8. Assist the Municipal departments to identify and monitor high risk indicators.
9. Compliance monitoring; and
10. Provide Internal control support to the Municipal Manager.
1. To develop and facilitate the implementation an enterprise-wide risk management policy, risk management strategy, risk management implementation plan, Anti-corruption strategy and fraud prevention plan;
2. Conducting risk assessment which involves managing the process of analysing risk as well as identifying, describing and estimating the quantitative and qualitative risks affecting the Municipality;
3. Facilitate the annual risk assessment, control self-assessment exercise and the maintenance of a comprehensive risk register;
4. Monitoring and reviewing processes to ensure that risk and compliance systems are in place;
5. Conducting audit of policies to ensure compliance and alignment to applicable legislation, guidelines, and framework;
6. Providing support, education and training to staff, at management level and Councillors on matters relating to risk management;
7. Ensuring that risk management strategy and its supporting processes are implemented;
8. Facilitation of the implementation of the Municipal Anti-Corruption strategy and fraud prevention plan;
9. Monitoring the implementation of management action plans to mitigate identified risks.
10. Monitoring the implementation of management action plans to address internal audit queries.
11. Monitoring the implementation of management action plans to address AG queries.
12. Monitoring organizational compliance with applicable legislation and approved policies