Lennoxtow n Initiative
Board Members’ Handbook
BOARD MEMBERS’ HANDBOOK
HOW WE WORK
The purpose of Lennoxtown Initiative is to stimulate the economic growth of Lennoxtown and to
ensure that all residents of the village can benefit from this growth.
In order to achieve this we recognise that we have a key role to play in:-
Helping to raise aspirations within the area and for the area.
Reaching individuals who may be detached from mainstream support.
Working with and for the community, listening to them, supporting them to develop
solutions and providing services which meet their needs.
Playing our part in overall regeneration activity, by adding value to the activities of
Helping to ensure that improvements to the area and to the lives of individuals can
Influencing and delivering the social and economic inclusion agenda locally through
our own work and with a range of partners.
Identifying and exploiting opportunities to deliver new services.
One of the most significant roles to be played by the Initiative is ensuring that the physical fabric
of Lennoxtown is improved. This will be done through a range of projects focusing on the Main
Street and its links to the rest of the village. One of the key projects will be the new civic heart
of the village, a multi-million pound facility which will encompass health, police, social work,
library and community space. This will be a major project for the company.
In addition to the Main Street regeneration, elsewhere, there is a need for regeneration and
reinvestment. This is evidenced by the need to improve the leisure and sports facilities in the
village and to enhance the environmental characteristics of its position at the foot of the
The Initiative is a partnership between the local community and two main public sector
authorities – NHS Greater Glasgow and Clyde and East Dunbartonshire Council. The Initiative
will assume stewardship of the substantial funds which will flow from the receipts received from
disposal of land for housing development at the former Lennox Castle Hospital site.
The Initiative is driven by a Board of Directors with members drawn from the public, private and
community sectors. The Board comprises 15 Directors with the following responsibilities:-
Corporate Governance and Financial Management.
Strategic overview and overall responsibility for implementation and review of key
Acting as champions for Lennoxtown.
Bringing to bear their own skills and expertise in support of service delivery.
The Initiative is incorporated as a company limited by guarantee with charitable status. The
Directors (apart from the Chief Executive) are non executive but play an active role in company
operations and development of strategy.
As a Board member a good understanding of the company’s constitution and structure is vital to
your role. The aim of this section is to give a broad overview rather than a detailed treatise. As a
body charged with spending public money it is important that the company is robust in delivering
our responsibilities. This document sets out the standards and expectations of the Board in
meeting this public duty.
Board members need to be aware of these processes to be effective in overseeing the proper
operation of the company. This document underpins the company’s actions and ensures that
the company acts within its powers.
Board Committees and Project Groups
To support overall activity and performance improvement the Board has set up two committees.
The remits of these groups are summarised below.
(a) Finance and Audit Committee
The purpose of the Finance and Audit Committee is to ensure that excellent financial
governance is ensured within the organisation and that financial management of the
company budget is robust and transparent. The Committee also supports the Board in
its responsibilities for issues of risk, control, governance and associated assurance.
The remit of the Finance and Audit Committee is as follows:-
(i) To consider all matters of finance;
(ii) To oversee the management of the company’s budget;
(iii) To consider and recommend the company’s Annual Accounts to the Board of
(iv) To consider proposals for funding trough the company’s Small Business Grants
Scheme and to ensure, as far as possible, that they are financially viable and
sustainable (it should be noted in the first instance that proposals will be
assessed through Business Gateway procedures and a recommendation made
to the Finance Committee).
Full Terms of Reference for the Finance and Audit Committee can be found at Annex 1.
(b) Nominations Committee
The Nominations Committee oversees, and is responsible for, all recruitment and
selection procedures relating to the appointment of directors. The committee comprises
of the Chairman, the Chief Executive, representatives from East Dunbartonshire Council
and NHS Greater Glasgow and Clyde plus a “community” member.
Full Terms of Reference for the Nominations Committee can be found at Annex 2.
The Board should seek to represent the views of the local community and have processes that
are open to public scrutiny. Board selection procedures should be available for public scrutiny in
order to comply with the recommendations of the Nolan committee.
Composition of the Board
The maximum number of directors who may serve on the Board of Directors at any one time is
Of this number a maximum of two directors shall be individuals appointed by “Partner
Members” (i.e. East Dunbartonshire Council and NHS Greater Glasgow and Clyde) and
they are referred to as “Partner Directors.”
The company Chief Executive is a director and member of the Board of Directors.
The balance figure of 12 directors shall be appointed from the “Community Members”
and are referred to as “Community Directors.”
At the conclusion of each Annual General Meeting, each Partner Director shall vacate
office, but shall be eligible for reappointment.
At the conclusion of each Annual General Meeting, three of the Community Directors
shall vacate office, but shall be eligible to be reappointed by the other directors. The
Community Directors to vacate office shall be those who have been longest in office
since they were last appointed or reappointed.
The Board should endeavour to achieve an appropriate balance according to gender,
ethnic origin and disability. Community Directors are appointed as individuals and not
as representatives of companies or organisations.
Role and Competencies of Board Members
Board members add value to the workings of the Board by using their:
general experience and skills to provide independent views to influence the strategic
leadership of the organisation and the Board’s governance role;
specialist knowledge, experience and skills to aid the development of specific areas of
the business and particular projects;
local knowledge and market intelligence to help identify issues affecting the local
networks and contacts to promote the company and its activities.
While Board members bring their specialist skills, knowledge and qualities to the Board, they will
be expected to have common abilities and competencies including:
strategic perception and thinking;
knowledge of leading an organisation;
effective decision making skills;
analytical and questioning skills;
team working within the Board and with the staff team;
be entrepreneurial and inspirational;
be supportive of the organisation’s aims and staff;
influencing the values and culture of the organisation.
When recruiting for board appointments, the Nominations Committee should provide:-
A clear job description which is available for all potential Board members;
The Nominations Committee should meet to consider the skills and knowledge available to
the Board and prepare a preferred person specification for any vacancies or potential
vacancies based on their succession plan;
Invitations to apply to join the Board should be publicised locally at appropriate time
periods emphasising the organisation’s commitment to equal opportunities and supporting
If possible a register of suitable candidates should be maintained for future reference.
The Appointment Procedures for Lennoxtown Initiative Board Members
Each candidate should be scrutinised for eligibility and suitability by the Nominations
Individual appointees are selected for their personal qualities and experience and not as
representatives of any other organisation or body;
The Nominations Committee should provide a short list of recommended candidates to the
Board of Directors prior to any announcement being made or any commitment given to a
This should include:-
(i) a summary list of all candidates e.g. name and current occupation;
(ii) a statement of the skills set identified by the Board to complement existing Board
(iii) the criteria used in reaching the decision to recommend inclusion in the short list;
(iv) A short biography of each recommended candidate.
Thereafter the final decision regarding interviews and final appointments remains with the
Induction and Training of Board Members
The Chairperson and Chief Executive are responsible for ensuring a full induction and training
programme is provided for all Board members.
Process for removal of Board Members
Should a Board Member be failing to a material degree in carrying out their duties, or for any
reason act in a way that would be detrimental to the operation of the Board, they may be
removed from the Board. In such circumstances the Board should recommend removal to the
company’s Nominations Committee who will take the decision on removal.
Under Article 45(i) of the Company’s Articles of Association a director shall automatically vacate
office if he/she is absent (without permission of the directors) from more than three consecutive
meetings of the directors, and the directors resolve to remove him/her from office.
THE RESPONSIBILITIES AND TASKS OF BOARD MEMBERS
Role of the Chairperson
The Chairman of the Board plays a pivotal and important role which includes:
Ensuring the Board fulfils its role and responsibilities and guiding its decision making
Chairing Board meetings and influencing the agenda;
Chairing the Annual Public Meeting to report on and to explain the activities over the
previous financial year and allow businesses and the general public to raise questions in
a public forum;
Ensuring all Board Members receive appropriate induction and training for their duties as
a Board Member;
Developing the Board as a team and developing the roles of individual Members;
Representing the organisation - this may involve both local representation and
representation on a broader scale;
Acting as a spokesperson on any major issues especially in relation to the media;
Acting as the main Board contact with the Chief Executive and staff.
Tasks of the Board of Directors
The Board of Directors is critical to the success of the company based on the mix of
business/community expertise and local knowledge that they bring to the role.
The specific tasks of Board members are:-
attend all Board meetings;
contribute to the strategic development and decision making processes;
approve the company’s annual operating plan;
ensure that the Chief Executive carries out effective appraisal of projects and
programmes before being submitted for approval;
monitor performance through receipt of regular monitoring reports from the Chief
Executive to ensure the organisation is accountable for its decisions and actions;
take appropriate action if performance deviates from agreed targets;
approve the company’s Annual Accounts;
ensure all corporate governance procedures and processes are in place and effective
(Corporate Governance Code of Best Practice).
Under this the Board will:
ensure that the criteria for Board membership and the appointment of Chairperson are
ensure that regular Board meetings are held and that appropriate quorums are met;
ensure that the appropriate internal controls and procedures are in place to ensure
effective corporate governance that accords with best practice;
influence the remuneration of the Chief Executive through the annual performance
be involved in any major organisational change process and restructuring of the
Liability of Board Members
Board Members are covered by the terms of Directors Liability Insurance effected by the
Independent Legal Advice
Board Members are entitled to access independent legal advice on their position as Director.
This access is arranged by the Company Secretary.
The Board will normally meet monthly to exercise their duties and responsibilities. Meetings
have a quorum. Apart from the formal strategic development and approval processes that take
place during Board meetings, Board Members can expect to be involved individually and
collectively in areas such as project development, the development of business plans as well as
specific projects and programmes where their specialist knowledge can be of benefit. All these
activities may involve workshop sessions, meetings with the relevant executives or consultants
and/or a review of draft proposals by the Board as a whole.
The Board will set up committees as circumstances demand with their remit agreed and
documented. The membership of committees will be dictated by the terms of reference for the
committee and the expertise available amongst the Board members. The Chairman will
normally have a key role in selecting members of each committee. The number of members on
each committee will be determined by the terms of reference and the nature of the knowledge
and skills required.
Board Members have a duty of confidentiality.
It is normal practice that no confidential papers should be disclosed or distributed to individuals
or other organisations by Board members without the prior consent of the Board. The Board is
expected to act in a collegiate fashion. If the Board reaches a minuted decision, collective
responsibility dictates that Board members should not register another view publicly.
The Board will:
represent the organisation externally by maintaining contact with appropriate
stakeholders. The range of stakeholders is wide and varied and can include businesses,
business representative organisations, local communities, elected politicians, Ministers,
Duties of a Board Member nominated as contact for staff who wish to invoke the
If staff, in good faith, identify situations or indeed believe they are being required to act in a way
is in breach of a legal obligation;
may involve possible criminal offence e.g. maladministration; fraud or misuse of public
is endangering the health and safety of any individual or damaging the environment;
is in breach of a professional code;
is improper or unethical in nature;
evidences that the rules of propriety have been breached elsewhere in the organisation,
but where they have not been personally involved;
requires them to act in a way which, for them, raises a fundamental issue of conscience
They are encouraged to follow internal procedures to rectify their concerns. However, staff have
the right to directly approach a Board Member. (The Board has nominated Tom Docherty who
will act in this regard.)
The nominated Board Member is provided with guidance on how they should deal with staff
concerns. They may decide to make their own enquiries but it is more than likely they will refer
the matter to the Board of Directors if they believe it can be investigated more effectively by
these mechanisms. They also have an option to have it externally investigated. Whatever
method they choose they should inform the member of staff of what they intend to do and keep
them informed of progress.
Full details of the Whistleblowing Policy can be found at Annex 3.
As a Board Member you will, from time to time, be required to approve projects submitted to
you. You are required to ensure that the project represents best value, and delivers against
either national or local objectives as part of an agreed operating plan.
The company have a Risk Management Policy to guide both staff and Board Members and
provide support to make informed and appropriate decisions on behalf of the company.
Full details of the Company Risk Management Policy can be found at Annex 4.
Specific Requirements of Board Members
Board Members have been appointed to add their expertise or knowledge to the company. In
approving projects, there is a key opportunity to apply that knowledge, to shape it, develop it,
link it or caution against it on the evidence of past experience or some other factor.
Board Members are asked to consider the project in light of their own experience and
understanding as a final approval to the project before expenditure will be enabled.
Code of Best Practice in Corporate Governance
The company is committed to best practice in corporate governance. The main elements of the
Network’s approach to corporate governance are:
Open advertising Board Member vacancies;
public meetings are held at least once a year to explain company activities, and allow
questions to be asked in public;
Annual Reports are published alongside Annual Accounts;
Board minutes are published and are available on the company web site;
The company will comply with the Freedom of Information Act.
All Board Members must comply with the strictest code of conduct procedures and must declare
relevant interests, gifts and hospitality.
Board Members have a duty to declare an interest, whether previously registered or not, which
arises in the course of their duties. These must be declared at a Board Meeting when such a
conflict may exist. The Board Member then takes no part in the Board’s decision.
Full details of the company Gifts and Hospitality Policy can be found at Annex 5.
Within the Company there is a common procedure for dealing with customer complaints. All
complaints are investigated rigorously.
The company aim to handle all complaints as quickly as possible and respond to all complaints
within five working days. Where this cannot be done because further investigation is required,
an interim response will be sent, which will advise when a fuller response is expected to be
provided. If, for any reason, the investigation is not completed, the complainant will be kept fully
informed of progress and of the planned forward timetable.
Customers can make a complaint to any member of staff within the company. They do not have
to put it in writing – a telephone call or email will be treated with the same importance. The staff
member should try to resolve the complaint and if unresolved, will pass details of the complaint
on to the Chief Executive.
If a complaint has been investigated and the person raising the complaint is not happy with the
outcome, they can write to the Chief Executive. He/She will acknowledge the letter as soon as
possible - within five working days at the most. If the complaint cannot be properly investigated
within that timescale, he will advise of this and keep him/her informed as to the progress of the
If, at the end of the internal procedures, the person raising the complaint is still dissatisfied, they
can refer their complaint to the Scottish Public Services Ombudsman. The Ombudsman looks
into complaints about Scottish Government Departments, Councils, Housing Associations, other
public bodies and the National Health Service. The service is free, and completely independent.
Scottish Public Services Ombudsman
23 Walker Street
Tel: 0870 011 5378
Fax: 0870 011 5379
AN N E X 1
FINANCE AND AUDIT COMMITTEE – TERMS OF REFERENCE
The Board of Directors have confirmed that membership of the Finance and Audit Committee
shall be as follows:-
Plus two other Board Members
The Finance and Audit Committee will meet at least four times per year. The Chair of the
Finance and Audit Committee may convene additional meetings as they deem necessary.
A minimum of three members of the Finance and Audit Committee will be present for the
meeting to be deemed quorate.
The external auditors will be invited to attend meetings as appropriate.
The Finance and Audit Committee may ask any other officials of the organisation to attend to
assist it with its discussions on any particular matter.
The Finance and Audit Committee may ask any or all of those who normally attend but who
are not members to withdraw to facilitate open and frank discussion of particular matters.
The Board of Directors may ask the Finance and Audit Committee to convene further
meetings to discuss particular issues on which they want the Committee’s advice.
At least once a year the Finance and Audit Committee may wish to meet the External and/or
Internal Auditors without the Chief Executive present.
The Finance and Audit Committee will minute its meetings and report back to the Board of
Directors after each meeting.
The Finance and Audit Committee will advise the Board of Directors on:-
The strategic process for risk, control and governance;
The accounting policies, the accounts and the annual report of the organisation, including the
process for review of the accounts prior to submission for audit, levels of error identified and
management’s letter of representation to the external auditors;
The planned activity and results of both internal and external audit;
Adequacy of management response to issues identified by audit activity, including external
audit’s management letter;
Proposals for tendering for either internal or external audit services or for purchase of non-
audit services from contractors who provide audit services.
The Finance and Audit Committee will as a minimum be provided with a progress report from
the Chief Executive summarising:-
Work performed (and a comparison with work planned);
Key issues emerging from Internal Audit work;
Management response to audit recommendations;
Progress on implementation of actions arising from internal audit reports;
A progress report from the External Audit representative summarising work done and
A report summarising any significant changes to the organisation’s Risk Register;
Any resourcing issues affecting the delivery of Internal Audit objectives;
Quality assurance reports on the internal audit function;
The draft accounts of the organisation;
A report on any changes to accounting policies;
External Audit’s management letter;
A report on any proposals to tender for audit functions;
Any latest developments in corporate governance relevant to the Committee.
The Committee will act on behalf of the Board to:-
Regularly review the structure, size and composition (including the skills, knowledge and
experience) required of the Board compared to its current position and make
recommendations to the Board;
Give full consideration to succession planning for executive and non executive directors in
the course of its work, taking into account the challenges and opportunities facing the
company, and what skills and expertise are therefore needed in the future and make
recommendations to the Board as appropriate;
Make recommendations on any matters relating to the continuation in office of any Executive
Director at any time including the suspension or termination of service of an executive
director as an employee of the company subject to the provisions of the law and their service
Keep under review the company’s leadership, executive development and talent
management activities and the outcomes of these programmes with a view to ensuring the
continued ability of the organisation to effectively meet its objectives;
Be responsible for supporting the Chairman in identifying and nominating for approval
candidates to fill the position of Chief Executive as and when a vacancy arises. In
discharging these duties ensure that an evaluation of the balance of skills, knowledge and
experience on the Board is considered before making an appointment, and, in the light of this
evaluation ensure a description of the role and capabilities required for a particular
appointment is prepared. In identifying or advising on suitable candidates the Committee
will, as appropriate:-
Use open advertising or the services of external advisers to facilitate the search;
Consider candidates from a wide range of backgrounds; and consider candidates on merit
and against objective criteria;
Utilise appropriate processes which preserve the reputation of the company;
The Committee, at least once a year, will review its own performance, constitution and terms
of reference to ensure it is operating at maximum effectiveness and recommend any
changes it considers necessary to the Board for approval.
The Committee is authorised:-
To seek any information it requires from any employee of the company in order to perform its
To obtain, outside legal or other professional advice on any matters within its terms of
NOMINATIONS COMMITTEE – TERMS OF REFERENCE
Members of the Committee are appointed by the Board. The Committee is made up of the
Chairman, the Chief Executive and representatives from East Dunbartonshire Council and NHS
Greater Glasgow and Clyde.
The Chairman of the Board of Directors shall assume the Chair of the Nominations Committee.
Meetings of the Committee are convened by the Chief Executive at the request of any of its
members. A forward schedule will be prepared with the Committee meeting at least twice a
year and at such other times as the Chairman of the Committee or other members shall
Unless otherwise agreed, notice of each meeting confirming the venue, time and date,
together with an agenda of items to be discussed, will be forwarded to each member of the
Committee, and any other person required to attend, no later than three working days before
the date of the meeting. Supporting papers are sent to Committee members and to other
attendees as appropriate, at the same time or as soon as practicable thereafter.
Only members of the Committee have the right to attend Committee meetings. However,
other individuals such as external advisers may be invited to attend for all or part of any
meeting as and when appropriate.
The quorum necessary for the transaction of business is two members.
In the absence of the Committee Chairman, the remaining members present may elect one
of their number to chair the meeting.
The Chief Executive acts as the Secretary of the Committee.
The Secretary minutes the attendance, proceedings and resolutions of all meetings of the
Minutes of Committee meetings are circulated promptly to all members of the Committee and
the Chairman of the Board and, once agreed, to all other members of the Board, unless a
conflict of interest exists.
Access and Reporting Responsibilities
The Nominations Committee will report back to the Board after each meeting.
The Committee makes whatever recommendations to the Board it deems appropriate on any
area within its remit where action or improvement is needed.
WHISTLEBLOWING POLICY– GUIDANCE FOR NOMINATED BOARD MEMBER
In line with corporate governance requirements, the company have a whistleblowing policy with
a nominated Board Member acting as the reference point.
If staff believe that they are being required to act in a way which:-
is illegal, improper or unethical;
is in breach of a professional code;
may involve possible maladministration, fraud or misuse of public funds;
if staff are aware of evidence of criminal or unlawful activity of others where they believe
there is evidence that the rules of propriety have been breached elsewhere in the
organisation, but where the staff member has not been personally involved.
if staff are required to act in a way which, for them, raises a fundamental issue of
conscience they are entitled to approach the Board Member who has been entrusted with
the duty of investigating staff concerns about propriety.
Should a Board Member become involved in such an investigation the following is provided
as general guidance:
- Listen objectively to what the staff member has to say;
- Decide whether the matter raised falls into any of the categories outlined above or,
in your opinion, merits further investigation. (Matters of personal grievance not
covered above may be more appropriately referred back to the staff member
advising that this is outwith your remit. In these circumstances it is suggested that
you recommend the normal Grievance Procedures should be followed);
- Treat the matter confidentially. Where the staff member identifies him/herself a
decision should be taken, on a case by case basis, as to whether their identity can
remain confidential throughout the investigation should they so request. Where it is
possible to conduct the investigation without revealing the name of the party
involved, every effort should be made to do so.
The policy is designed to encourage whistleblowers to identify themselves but
anonymous allegations may be investigated to the extent possible, taking account
of their potential seriousness.
RISK MANAGEMENT POLICY
Risk Management Policy
3. Definition of a risk
4. Risk management strategies and risk appetite or risk tolerance
5. Summary of the Lennoxtown Initiative process for managing risk
6. Changes to this policy
A Risk Register template
Risk is inherent in business and we must manage risk in all business activities. Risk
management activity must be focused, relevant and useful and therefore needs to be
properly structured and embedded in company business.
The company is required to comply with Corporate Governance requirements defined by the
Scottish Government. These mirror the Combined Code “Principles of Corporate
Governance and Code Provisions” (issued 25 June 1998) and the requirements of the
Turnbull Report “Internal Control: Guidance for Directors on the Combined Code” (issued 27
September 1999), adapted as required to the accountability arrangements for public sector
A company Risk Management Policy has been developed to provide clarity as to the
company’s approach to risk and to ensure a consistent application.
It is important to recognise that as a business the company is not averse to taking risk and
indeed because the company deals in areas of potential market failure the company’s
assessment of risk commensurate with reward is different to decisions that may be taken by
private sector organisations. The implementation of this risk management policy should not
change this attitude to risk.
Instead the techniques and procedures described within the policy will help to identify and
evaluate the risks that exist within the company business and enable the company to make
informed decisions about how to manage risk and to take appropriate risks in a controlled
and measurable manner.
This Risk Management Policy describes how senior management and the Board gain
knowledge and assurance from the business that risks are being identified, evaluated and
managed appropriately and consistently across the company. This policy details the Chief
Executive’s expectations of the business and outlines responsibilities and the key principles,
processes and behaviours that enable the company to:-
Properly focus the direction, approach and organisation of risk management within the
Identify, evaluate, prioritise, manage and monitor all material business risks in a
consistent and effective manner across the company, enabling early warning of key
Agree collective and individual performance expectations, link these to the successful
management of risk and monitor performance delivery;
Learn from mistakes and successes; and
Anticipate and adapt to relevant changes in the complex environment in which the
The approach outlined in this policy helps to drive the company forward by managing
potential barriers to the achievement of business objectives.
This document also provides the reference point against which the assurance provided by the
company is tested, to a level that enables the Board to report with confidence that the
company is being governed well.
3. Definition of a risk
A risk is the threat that an event or action will adversely affect the company’s ability to fulfil s
stakeholder expectations and to achieve its business objectives.
Business risk arises as much from the possibility that the opportunities won’t be realised as it
does from the possibility that the threats will materialise.
In the company we classify risks as Reputational, Operational, Financial and External risks.
Guidance on how to evaluate risks is given in section 5 of this document.
Reputational risks are those risks that affect how the company’s stakeholders, partners,
customers, staff and the public regard its activities. Reputational risks include adverse media
exposure, risks with a political impact and any risks arising from regulatory failure.
Reputational risk is potentially the highest category of risk and staff require to be aware of this
type of risk in all of the company’s activities.
Operational risks are those risks associated with the processes, techniques and systems
used to manage the company on a day-to-day basis. They include the internal processes
used to conduct business and achieve the objectives set in business plans; and the internal
processes used to evaluate, approve and control projects, as well as those internal processes
used to attract, develop, reward and retain the necessary levels of skills and capabilities which
the company needs to carry out its core activities efficiently, effectively and economically.
Financial risks are related specifically to the processes, techniques and systems used to
plan, allocate and manage the company’s finances and assets and include all risks of loss or
improper use of funds.
External risks are those risks which arise from the political or economic environment or other
sources beyond the control of the Board or management but which could significantly affect
the company’s operational sustainability and financial viability.
Some risks could potentially belong to more than one of these categories. In such cases they
should be classified in accordance with where the risk is greatest, in terms of likelihood and
impact, and the risk management strategy determined accordingly.
4. Risk management strategies and risk appetite of risk tolerance
It is the responsibility of the Board to determine risk appetite, so that management may be
guided in their attitude towards risk and to the risk management strategy that is to be
adopted to manage the specific risks.
Risk management strategies
The risk management strategy taken will be specific to each risk and will generally depend
on the nature of the risk, the cost of each alternative strategy for managing the risk and also
management’s risk tolerance.
The risk strategies may be grouped to strategies to decrease risk; strategies to maintain risk;
and strategies to increase risk.
Strategies to decrease risk – This is probably the most common strategy. It involves
reducing the likelihood that the risk will arise or the impact that the risk may have on the
company. This may be achieved by:-
- introducing controls to reduce or eliminate the likelihood that the risk will arise and
reduce its impact on the company; changing the process so that the risk will be avoided
altogether. In addition, insuring risks is a method of reducing impact by transferring the
risks to the insurance company.
Strategies to maintain risk – Companies often decide to accept the risk perhaps because
the cost of reducing the risk is exceedingly high compared to the risk itself, or because the
likelihood that the risk will arise or its potential impact are considered to be low. In this
instance, it is appropriate to put in place an early warning system that will monitor, on an
ongoing basis, whether the likelihood that the risk will materialise or its potential impact is
increasing. To support this, the company may also have an emergency process that may be
invoked whenever the monitoring suggests that this is necessary. Of greater concern are the
instances where risk is maintained unknowingly because no one has identified the risk in the
first place or the process owner has neglected to manage the risks within his process. This
is not an acceptable strategy.
Strategies to increase risk – Companies often decide to take advantage of risks and
exploit the opportunities created by the risk materialising, primarily because the economic
benefits from doing so are expected to outweigh the risks that are being taken.
The Risk Appetite of the company is summarised as follows:
Reputational risks must generally be minimised and the Board must be involved in any
decision that deliberately exposes the company to any material reputational risk.
Operational risks – In operational matters, the company is required to provide value for
money and accordingly requires to take appropriate risks in a controlled and measurable
manner as opposed to adopting a wholly risk averse position. Therefore, depending on the
risk, a strategy to increase, decrease or maintain risk may be appropriate. In deciding which
strategy is appropriate consideration must at all times be given to the potential impact on the
customer and stakeholder and the impact on the continuity of key business operations and
processes. The risk and the appropriateness/success of the risk strategy that has been
adopted for each operational risk must be considered on a regular basis. Because the
company deals in areas of market failure, the assessment of risk commensurate with reward
will be different to decisions taken in the private sector.
The risks associated with each specific project must be identified and evaluated at the
outset of the project and regularly reviewed throughout the duration of the project, along with
the appropriateness and effectiveness of the risk strategy.
Where the decision has been taken to accept or maintain the risk, an early warning system
must be put in place to monitor, on an ongoing basis, whether the likelihood that the risk will
materialise or its potential impact on the business is increasing. The formality of this system
and reporting arrangements should be commensurate with the magnitude of the risk and
should be aligned with escalation procedures as described below.
Financial risks – In financial matters the company is required to act with probity in all
instances and to be fully accountable for all funds and assets with which it is entrusted.
Therefore risks of impropriety and fraud should be minimised. However as finance is a
resource to be deployed in pursuance of business objectives, it is likely that a degree of risk
commensurate with the value of the benefits being sought will be taken. This is acceptable
provided that the risk is quantified and decisions on accepting risk are made in accordance
with the delegated authority arrangements and provided that the sum of the risks taken in
total, will not endanger the operational sustainability and financial viability of the company.
The company should seek to protect and maintain facilities, equipment and other assets,
including IT facilities, from deterioration, theft or destruction or non-business use. In deciding
which risk management strategy is appropriate, consideration must at all times be given to
minimising the potential impact on, and safety of, staff, the customer, stakeholders and the
impact on the continuity of key business operations and processes.
External risks – as mentioned above, external risks arise from the environment in which the
company operates and are usually beyond the control of the Board or management. If they
emerge they could significantly affect reputation, operational sustainability and financial
An early warning system must be put in place to monitor, on an ongoing basis, whether the
likelihood that the risk will materialise or its potential impact on the company is increasing.
Escalation procedures as defined below should be invoked when necessary.
5. Summary of the process for managing risk
The company’s system of properly managing risk is based upon four key principles: it is risk
based; it is embedded in the business; it provides assurance to stakeholders and its
effectiveness is reviewed.
In order to identify risks there needs to be a sound understanding of the business and its
objectives. Various techniques can be used, including facilitated “round table” discussions.
The assessment of the significance of a risk involves a high degree of subjectivity and
judgement. Nevertheless it is essential to carry out an assessment which is logical and
justifiable in order to ensure that resources are targeted to the areas of highest risk.
The approach adopted here is driven by the desire to keep the methodology simple and
practicable and to ensure that risks are sized correctly relative to each other. Risks are
evaluated by assessing the probability and adverse impact of the underlying event. The size
of the risk also needs to be evaluated at the inherent and residual levels, i.e. both before
and after considering the controls and mitigating actions which are in place. Because of the
inherent subjectivity and uncertainty associated with risk assessment, all risk assessments
should be sense checked for reasonableness and the overall logic for the assessment must
be documented so the reasoning behind it is explained.
Risks are prioritised in terms of their: ‘Likelihood’ - how likely the risks are to materialise and
‘Impact’ - the significance to the company if they were to occur. The assessment of impact
and likelihood is judgemental on the following scales:
Scale Impact Likelihood
1. Insignificant e.g. negligible Rare e.g. less than once in 10 years
2. Minor Unlikely
3. Moderate Moderate
4. Major Likely
5. Catastrophic e.g. loss of ability to sustain on-going operations
6. Common e.g. almost certain to occur more than once in the next 12 months.
An overall rating of high, medium or low is assigned to each risk based on multiplying
the scores for likelihood and impact
Determining an appropriate risk management strategy or treatment for each risk.
A consistent process is in place to define the most effective way to treat the material
business risks that have been identified. This process is in line with the company’s risk
tolerance and takes into account the cost effectiveness of potential treatments and
considers the adequacy of the residual risk following any treatment that has been
When identifying and evaluating the key risks, the following should be considered:
How easy the risk is to manage;
The risk strategy or specific controls that are in place to manage the risks;
Whether this strategy or the specific controls, if complied with, adequately reduce
the risks to within management’s risk tolerance;
Any actions that are required to align the control environment to the risks or to
implement more efficient or cost effective controls.
Allocating responsibility for risks
While the Board requires assurance on the effectiveness of the risk management processes
and the Chief Executive has the ultimate accountability for risk, all staff have responsibilities for
ensuring that risks are managed. The risk owner is responsible for ensuring that the agreed
strategy to manage the risk is implemented. Other staff are likely to be involved in carrying out
the specific actions involved in this implementation. Every member of staff has responsibility for
managing risk within their own area of the business, and this should be reflected on their
individual objectives. This responsibility covers both the control of risk and the upward reporting
of any control breakdowns.
POLICY FOR GIFTS AND HOSPITALITY
As employees of a publicly funded organisation, Lennoxtown Initiative staff require to be, and be
seen to be, above any criticism or suspicion in terms of the propriety and integrity of their
conduct. A number of safeguards, such as open and competitive tendering, delegated
authority, registers of staff and directors’ interests and internal and external audit reviews, are
therefore in place to protect both the individual and, equally as important, Lennoxtown Initiative
from any wrongful accusations. Another key part of this framework is the maintenance of an
effective system for recording and approving any offers of gifts and hospitality made to the
In the course of their day to day activities staff may be offered gifts by individuals or external
organisations. All offers of gifts should be declined unless courtesy demands acceptance or it
accords with seasonal custom (e.g. at Christmas).
If a member of staff accepts a gift then they must declare to the Chief Executive at the earliest
opportunity and they, in turn, will then decide on how the gift should be disposed of. Where the
gift has an estimated value of less than £15 (e.g. calendars, mouse mats and diaries) or is
perishable (e.g. flowers or baskets of fruit) then it may be kept by the recipient without notifying
their line manager.
It is not the intention of this policy to prevent any Lennoxtown Initiative employee accepting
normal courtesy hospitality such as business lunches or attendance in an official capacity at a
public function. However, care must be taken to ensure that whenever outside hospitality is
accepted, no obligation to the person offering the hospitality is thereby created or seen to be
created. In order to minimise the possibility of an employee’s impartiality being questioned in
subsequent business dealings, the following guidelines should be observed:
(a) All hospitality received must be at a moderate level and should not involve the same client,
organisation or supplier on a regular basis.
(b) Any offer of hospitality from an external organisation which includes an overnight stay or
travel requires prior approval by the Chief Executive.
In all the above circumstances, approval will only be given if it can be assumed that the work of
Lennoxtown Initiative is being facilitated by accepting the offered hospitality.
Recording of Gifts and Hospitality
Details of all hospitality accepted will be recorded on a register maintained by the Company
which will disclose the following information:
Recipient’s Provider’s Description of gift Approximate Reasons for offer
Date Name Name or hospitality Value (£)
Code of Conduct Policy
All Lennoxtown Initiative employees should familiarise themselves with the important
information outlined below.
Gifts and Hospitality
Staff should not misuse their official position or information acquired in the course of their
official duties to further their private interests or those of others. They should not receive
benefits of any kind from a third party which might reasonably be seen by members of the
public to compromise their personal judgement and integrity. It is a criminal offence for staff to
receive, agree to accept or attempt to obtain any gift, or consideration for doing, or not doing,
anything or showing favour, or disfavour, to any person in their official capacity.
Any offer of cash or in kind, or irregular suggestion, to a Lennoxtown Initiative employee in
connection with the award or subsequent supervision or control of a contract must be reported
immediately by that employee to the Chief Executive.
It is not the intention of this section to prevent any Lennoxtown Initiative employee accepting
normal courtesy hospitality (such as business lunches or attendance in an official capacity at a
public function) but care must be taken to ensure that whenever outside hospitality is
accepted, no obligation to the person offering the hospitality is thereby created. A Lennoxtown
Initiative employee's impartiality in subsequent dealing may be questioned or be capable of
being misconstrued and in order to minimise that possibility the following guidelines must be
any offer of hospitality to a Lennoxtown Initiative employee from a commercial organisation,
which includes an overnight stay or travel for the offer, requires the prior approval of the
offers of hospitality involving attendance outside working hours should be advised to the
Chief Executive who will decide if the offer may be accepted.
any proposed acceptance of an offer of hospitality which might be considered outwith normal
business practice should be disclosed to the Chief Executive and they will decide if the offer
may be accepted.
In all the above circumstances, approval will only be given if it can be assumed that the work of
Lennoxtown Initiative is being facilitated by accepting the offered hospitality.