Integrated risk management : a mechanism to minimise risks for local government : a critical perspective

Geldenhuys, L. (2006-12)

Thesis (PhD (School of Public Management and Planning ))—University of Stellenbosch, 2006.


The absence of an integrated risk management programme in local government in South Africa creates the danger that these risks are not identified, which could be catastrophic, and opportunities to minimise losses are not utilised. A further problem is that common risk-management terminology is lacking and management are dependent on diverse legislation as a guide to developing and implementing risk management. In order to achieve the strategic and operational objectives of local government in an effective and efficient manner, a pro-active identification and evaluation of potential risks should be established to minimise their impact. Officials on every level need to be informed about processes and techniques for managing risks and recalibrating activities to enable management to operate more effectively in risk-filled environments. Problems were identified that prevent management from providing reasonable assurance to stakeholders that the most significant risks are being addressed. These problems are as follows: the lack of applying risk management in an integrated manner; the enforcement of integrated risk management due to the lack of relevant legislation; a lack of training in risk management, ethics and risk response plans; a lack of practical techniques to assist officials in taking remedial action to prevent recurrence of risks; the absence of a risksensitive organisational culture; and a lack of commitment and leadership from politicians and management. Relevant legislation on integrated risk management should assist in embedding a culture where everyone in local government is obliged to adhere thereto and to conduct their dayto- day activities accordingly. A mission and vision statement needs to be developed and implemented with the consent of all stakeholders. Integrated risk-management processes, which are generally lacking or incomplete in local government, should be aligned with generic public management functions. An integrated risk-management programme can be enhanced by establishing a risk organisational structure within local government. The establishment of a risk management department and risk committee is essential to the enhancement of corporate governance and the management of risks that might have a negative impact on local government. Internal and external controls should be evaluated regularly to facilitate the riskmanagement programme. An Integrated Risk Monitoring Technique is proposed as a technique to assist stakeholders in identifying root causes of risks and the management thereof. A model of integrated risk management was designed to assist academics and practitioners to get a holistic perspective on integrated risk management and to assist in the management of risks.

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