UK government requires urgent risk management boost finds top-level report

In its Leadership For The Long Term: Whitehall's Capacity To Address Future Challenges report published on Monday, the PASC concludes that despite a lot of good work there is 'not a comprehensive understanding across government of the future risks and challenges facing the UK'. In particular it finds that the UK Treasury has failed to learn lessons from the 2007-8 financial crash. The report says there remains a lack of understanding about how best to prepare for a future financial crisis that may occur as a consequence of the interconnectedness of financial uncertainty with wider risks and uncertainties. Financial and economic risks are not included in the UK government's National Risk Register. This means the government does not consider these systemic risks alongside other, non-financial risks such as pandemic flu and antimicrobial resistance, says the PASC.hideMore generally the report says that although there are isolated instances of systematic and imaginative risk analysis across the government, too often day-to-day problems 'crowd out preparation for the longer-term and the unexpected'. Systemic risk arises from the interconnectedness of many threats. But the report warns that 'all evidence' suggests that Whitehall is 'insufficiently connected' to be able to respond. "Most of the key problems faced by governments are horizontal and most government responses are vertical," it says. The report also concludes that shortsighted policies can become endemic and too often go unchallenged by the Civil Service. Civil servants need support to create 'systematic and imaginative analysis of trends, risks and possibilities', it points out. Obstacles such as inadequate skills, inconsistent use of language, jargon, mistrust and above all, a lack of cross-government working, must be addressed, it finds. "The government's assessment of likely future challenges should be as open as possible, to enable counter views to be articulated, and ensure that debate is as wide as possible. Otherwise, group-think will prevail and it will come as a surprise when expected futures do not materialise, leaving the UK unprepared to take advantage of future opportunities," says the PASC in the report. It warns that contact between Whitehall and outside sources of knowledge and analysis are 'inadequate'. "By its nature, foresight demands access to the widest sources, not closed rooms," the report says. Bernard Jenkin MP, Chair of the Committee, said: "Whitehall has developed a lot of useful capacity for assessing risks, building resilience and looking for long-term opportunities, but so much more could be achieved by understanding how to bring this together. This will mean we can deal with unforeseen adverse events more effectively, but also increase the UK's capability to exploit opportunities and innovation, which is necessary for us to remain competitive and viable. "We have found a lot of assessment and planning for the future, which is key to maximising opportunity as well as managing risks, but we need better coordinated, systematic and imaginative analysis of trends, risks and possibilities across the whole of government. This would better underpin far-reaching decisions on long-term issues such as low productivity growth, infrastructure, technology, financial regulation, defence and security," he added. The Committee recommends that the UK Treasury plan for a range of crisis scenarios, based on a broad range of forecasts, data sources and assumptions that may be triggered by non-financial and financial events. This should include desktop exercises, or 'war games', involving the Bank of England and the Financial Conduct Authority as well as the Treasury. It also recommends that the Cabinet Office include systemic financial and economic risks in its National Risk Register. According to the report, the Cabinet Office's horizon-scanning programme team, while welcome, is 'too small to gather, let alone synthesise, all the relevant understanding generated around government'. With this small resource of just five people the government cannot identify, assess and synthesise information and therefore advise ministers on how to address gaps or duplication in policy and plans, or resolve conflicts and generate a comprehensive view of the key policy risks and challenges, says the PASC. The equivalent department in Canada, which covers a much smaller population, has some 25 staff and draws on a large number of outside experts. The report argues that early in the next parliament, the government needs to set out how it will improve the machinery of government and better educate civil servants at all levels to think ahead about systemic risk, risk management, uncertainty and future challenges. The Institute of Risk Management, which gave oral evidence to PASC's inquiry, says the report shows a 'clear and present need for government to upskill its risk capacity'. IRM's Chief Executive, Ian Livsey, said Whitehall needs central risk training provision, proper resourcing and a commitment to giving its risk functions the 'capacity and authority needed to do their job'. "IRM welcomes the Committee's recommendations in this area and its recognition of the current limitations in government capacity. We also strongly second their view that Whitehall needs to adopt a more strategic and joined-up approach to risk planning and horizon scanning. Cost-cutting on risk preparedness and planning is the ultimate in false economies; not only does it weaken the effectiveness of a reactive response to risks, it also limits the UK's ability to exploit their opportunities," said Mr Livsey.

UK government requires urgent risk management boost finds top-level report

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