Presentation Stroud District Council

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					A Risk Management approach to
        Climate Change




                    Theresa Mortimer
                   Audit/Risk Manager
Internal Audit, Risk Management & Insurance Services
          Business Management Directorate
  What questions do we now need to consider?
• Do you know what impact climate change could have on your area?

• Do your current policies, strategies and plans include provision for
  the impacts of climate change?

• Can you identify and assess the risks from climate change to your
  services?

• Are developments with a lifetime of more than 20 years required to
  factor in climate change?

• Are you addressing climate change in your local Community
  Strategy?
Is there a tool available to help me answer
these questions and help me prioritise my
             limited resources?



   Risk Management!
What is risk management?
   A central part of our strategic management.
   It is a continuous cyclical process whereby the council:

          identifies,
          assesses/evaluates,
          controls: and
          monitors

      potential opportunities and adverse effects that challenge
      the assets, reputation and objectives of the Council.
   It enables the Council to effectively manage strategic
     decision making, service planning and delivery to
     safeguard the well being of its stakeholders
What is Risk Management?




                   Risk
                Management
                   Cycle




                   Assess
What type of risks do we face?
            Risk and Opportunity Rainbow




Political
        WHY DOES IT MATTER?
 “.. I never saw a wreck and have never been wrecked, nor
 was I ever in any predicament that threatened to end in
disaster of any sort”
                      from a paper presented by EJ Smith, 1907
 On 14 April 1912, SS Titanic sank with the loss of
1500 lives... One of which was its captain… E J SMITH

                          IT MATTERS!
          Environmental Risks




Drought
            Climate Change Risks and Opportunities
Climate Change Risks and Opportunities
                  Markets: changing demand for goods and services
   Risks:
      Decreased or disappearing demand for present range of goods and/or services
      Competitors position enhanced by climate change

   Possible impacts:

      Tourism; Mediterranean summer becomes too hot so more holidays taken in uk
      Agriculture: More demand for warm weather food and drink products
      Urban lifestyles: warmer summers encourage al-fresco eating, pavement cafes, siestas
      Leisure: Less snow for winter sports
      Hotter temperatures will put more pressure on leisure facilities such as pools and lidos.


   Opportunities/Controls/Mitigation

      New products or modifications to existing products
      Become an early mover to changed markets and lifestyles
      Undertake market research and product/service development with climate change in mind
Climate Change Risks and Opportunities
      Finance: Implications for investments, insurance & stakeholder
                                   reputation

Risks:
 Failure to climate proof creates difficulties in securing investment and/or insurance
   cover

 Potential liabilities if climate change is not factored into long term decisions about the
  future

Possible impacts:
 Insurance Policies: Check Insurers stance on undefended flood risks and impact on
   premiums

 Future Developments: improved specification that takes account of future climate is
  likely to be cost effective in most cases

Opportunities/Controls/Mitigation
 Evidence of climate proofing enhances reputation with all stakeholders, provides
   security for investments and an opportunity to reduced insurance premiums
How has the impacts of climate
       change affected
Gloucestershire County Council
   in respect of Insurance?
    What types of claims are we now seeing?
Long term dry conditions:

           – Drought affects trees- roots cause subsidence to
             properties and can create heave in pavements creating
             slips trips and falls
Wet conditions:

           – Flooding
           – Drainage issues

Increase in wind speeds:

           – Structural damage to buildings

Extreme cold conditions:

           – Frozen pipes - escape of water
How much did the floods cost GCC in claims ?




                 £2.7m
            The Cost of Risk!
  For every £1 paid on an insurance claim,




between £8 and £36 is spent on hidden costs
Hidden Costs


   Lost production/work time following an incident

   Staff absence following an incident

   Administration costs following an incident

   Loss of information/data/knowledge

   Increased financial costs – reinstatement/continuity
Does risk management work?

   Drainage
     Tree Management Policy
     Flood Resilience
     Maintenance Programmes
     Arson Prevention Programmes
     Crime Prevention Programmes
Does risk management work?

          Insuring Schools against flood/storm damage
   Risk Management and Insurance services (RM&IS)
    used the risk management process to identify an
    emerging risk during 2006/07 which related to flood
    and water damage at schools. It was noted that the
    increased ‘incidents’ and insurance claims relating to
    this particular risk was significantly increasing.
   RM&IS decided to insure against this emerging risk.
    This decision saved the council around £1.9m as
    a result of the recent flooding within GCC schools.
Does risk management work?

•    “The tender document painted a positive image of the Authority and Marsh
    are pleased to report that marketing the programme has achieved premium
    savings of 24% on a like for like cover basis compared with 2007/08 and
    22% premium savings taking into consideration increased cover.

•   In monetary terms this represented £402k savings on like for like cover and
    £373k savings with the increased cover”. Source - Marsh (Insurance Broker)

•   In addition, the Insurer has provided £50k per year (over the next three
    years i.e. £150k) to expend on risk management initiatives.


• The premium savings and risk management funding provided
  are due to GCCs effective risk management
  arrangements/invest to save projects undertaken and excellent
  claims history.
Risk Management should:

  Form part of the strategic & operational business planning
   process

  Be part of performance management

  Be part of financial planning

  Form part of project initiation and project management
   processes

  Consider risks in relation to partnerships

  Inform policy and decision - making
The overarching risks of climate change
 to us all is the risk to our reputation as
     a community leader and reliable
 provider of products and/or services or
     our ability to meet our statutory
               responsibilities
The overarching opportunities of climate
  change is to significantly enhance our
 green credentials and Corporate Social
              Responsibility
“Lets manage the risk not manage the damage”

				
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