Risk management and business continuity planning is an essential part of running a commercial business. But while it can help to protect profits and ensure a business's future, there is no less of a need for robust BCP in the public sector.
Governed by the Civil Contingencies Act 2004, public sector organisations have a legal responsibility to assess the risk of emergencies and put contingency plans in place that will safeguard the public and ensure their key services can still be delivered. Nigel Cooper, public sector practice leader at Aon Risk Solutions, says this makes robust BCP essential in the public sector. "All kinds of events can disrupt service delivery in the public sector," he says. "Having mature plans in place ensures they comply with the Act but also gives insurers confidence that risk is being managed."
The range of events that have the potential to disrupt a public sector organisation is highlighted in the Chartered Management Institute's 2013 Business Continuity Management Survey. This found that in 2013 the most common disruption - accounting for 54% of incidents - was extreme weather such as floods and high winds. This was followed by loss of people due to illness (42%) and loss of IT (40%).
Public sector organisations can also find themselves having to pick up the pieces when a business fails. Graeme Mackenzie, risk and resilience manager at Dundee City Council and a board director at Alarm, The Public Risk Management Association, explains: "If there's a fire in a private sector residential home for the elderly and the residents need rehoming, a local authority can find itself having to do this even though it wasn't providing the service."
A further example of this is the introduction of academies. Although these are run independently, the local authority retains the duty to deliver education to its citizens. Therefore, if an academy fails, the local authority would find itself having to find places for the pupils at schools within the area.
But while many public sector organisations have responded well to emergencies in the past, those responsible for BCP face significant challenges. Over the past few years, government funding has been slashed, putting pressure on the resources available for BCP.
The cuts have affected BCP in public sector organisations in other ways too. Faced with smaller budgets, many have been forced to find new ways of working - with outsourcing and shared services becoming increasingly common. For example, according to a report by Interserve, Local services in need of transformational change, when they were surveyed in 2012, local authorities planned to outsource 32% of all services by 2014/15, with this figure increasing to 60% among larger authorities and those that need to make greater-than-average savings.
But while outsourcing can help an organisation manage its finances, it can have ramifications for those responsible for BCP. Crucially, although it has outsourced the service to a third party, it still retains the responsibility for delivering. Simon Davis, board director and former chair at Alarm, says this needs to be considered during the tendering process. "Public sector organisations need to look at how resilient a third party is, not just what the cost will be," he says. "They also need to consider how the outsourcing of one service might affect others. It can be very complicated."
Budgetary constraints also mean that many public sector organisations will have sold off some of their assets, with potential implications for their BCP. Davis explains: "A local authority can unwittingly find itself with no assets to deploy. As an example, one of their duties is to provide rest shelters if there is an evacuation. Many would have relied on leisure centres to provide this function but many of these centres have been sold off, leaving local authorities to find alternative venues that are suitable."
A further challenge for those dealing with BCP is that it is not always taken as seriously as it should be. Paul Tombs, head of public services and infrastructure at Zurich Municipal, explains: "BCP isn't regarded as a key priority in some public sector organisations so risk managers can struggle to engage the rest of the organisation, especially the senior team. This can make it difficult to get the support needed to design and test plans."
These challenges can have serious implications for BCP. With organisations evolving to control costs, plans can quickly become out of date. Tombs says this can even happen where there's no change to the way services are delivered. "Someone key to the continuity plans could leave or take on a new role. All plans should be monitored at least annually," he says.
Another common issue with plans is complexity, especially where they have developed in isolation by the risk management team. As well as getting buy-in from other parts of the organisation to ensure plans are well understood, Davis also recommends focusing on the consequences rather than the causes. "Think about the outcomes such as losing the use of a building or having a reduced workforce. It's the consequences that are important not the causes," he explains.
And plans need to be tested regularly to ensure they are fit for purpose. "If things go wrong, fingers will be pointed," says Hugh Leighton, senior consultant at Aon Risk Solutions. "Testing a plan, both within an organisation and independently, ensures it's robust and would respond appropriately."
While the public sector faces BCP challenges, it also benefits from a collaborative approach to risk management that is much more unusual in the private sector. Ideas and resources are pooled together through local resilience forums and through organisations such as Alarm to share best practice.
In addition, there is support from insurers and brokers. Mackenzie explains: "Insurers have come out from behind their policy wordings to help with risk management. It's in their interests but there's also a big societal benefit."
But, while there's a strong sense of collaboration in the market, this will be tested over the next few years. "The public sector has responded well to the emergency situations it's faced so far," says Tombs. "But there are more challenges ahead as further cuts are made."
This is part of a Post In Focus on the Public sector - see more on business continuity management in the public sector and Post's Q&A with Bill Sulman.
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