Agenda of Audit, Risk and Finance Subcommittee

Audit, Risk and Finance Subcommittee Minutes - 25 September 2018

N-logotype-black-wide Audit, Risk and Finance Subcommittee

13 November 2018

Page No.

1. Apologies

Nil

2. Confirmation of Order of Business

3. Interests

3.1 Updates to the Interests Register

3.2 Identify any conflicts of interest in the agenda

4. Public Forum

5. Confirmation of Minutes

5.1 25 September 2018 6 - 12

Document number M3782

Recommendation

That the Audit, Risk and Finance Subcommittee

Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 25 September 2018, as a true and correct record.

6. Chairperson's Report

7. Audit Reports on Long Term Plan 2018-28 and Consultation Document 13 - 33

Document number R9751

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Audit Reports on Long Term Plan 2018-28 and Consultation Document (R9751) and its attachments (A2066653 and A2066652).

8. Quarterly Report 1 July - 30 September 2018 34 - 46

Document number R9774

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Report 1 July - 30 September 2018 (R9774) and its attachments (A2072704 and A2076104).

9. Health Safety and Wellbeing Performance Report 47 - 60

Document number R9828

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Health Safety and Wellbeing Performance Report (R9828) and its attachment (A2069618).

10. Internal Audit - Quarterly Progress Report to 30 September 2018 61 - 62

Document number R9772

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Internal Audit - Quarterly Progress Report to 30 September 2018 (R9772).

11. Quarterly Key Risks Report - 1 July to 30 September 2018 63 - 85

Document number R9524

Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Key Risks Report - 1 July to 30 September 2018 (R9524) and its attachments (A2069462 and A2079218).

Public Excluded Business

12. Exclusion of the Public

Recommendation

That the Audit, Risk and Finance Subcommittee

Excludes the public from the following parts of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

Item	General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Particular interests protected (where applicable)
1	Audit, Risk and Finance Subcommittee Meeting - Public Excluded Minutes - 25 September 2018	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.	The withholding of the information is necessary: · Section 7(2)(g) To maintain legal professional privilege

Item

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Particular interests protected (where applicable)

Audit, Risk and Finance Subcommittee Meeting - Public Excluded Minutes - 25 September 2018

Section 48(1)(a)

The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7.

The withholding of the information is necessary:

· Section 7(2)(g)

To maintain legal professional privilege

Minutes of a meeting of the Audit, Risk and Finance Subcommittee

Held in the Council Chamber, Civic House, 110 Trafalgar Street, Nelson

On Tuesday 25 September 2018, commencing at 9.03a.m.

Present: Mr J Peters (Chairperson), Her Worship the Mayor R Reese, I Barker, B Dahlberg and Mr J Murray

In Attendance: Councillors P Matheson, B McGurk, T Skinner, S Walker, Chief Executive (P Dougherty), Group Manager Infrastructure (A Louverdis), Group Manager Environmental Management (C Barton), Group Manager Community Services (R Ball), Group Manager Corporate Services (N Harrison), Group Manager Strategy and Communications (N McDonald), Manager Communications (P Shattock) and Governance Adviser (R Terry)

Apologies: Nil

1. Apologies

2. Confirmation of Order of Business

There was no change to the order of business.

3. Interests

There were no updates to the Interests Register, and no interests with items on the agenda were declared.

4. Public Forum

There was no public forum.

5. Confirmation of Minutes

5.1 14 August 2018

Document number M3685, agenda pages 7 - 13 refer.

Resolved AUD/2018/042

That the Audit, Risk and Finance Subcommittee

Confirms the minutes of the meeting of the Audit, Risk and Finance Subcommittee, held on 14 August 2018, as a true and correct record.

Barker/Murray Carried

6. Chairperson's Report

There was no Chairperson’s Report.

7. Draft Annual Report 2017/18

Document number R9204, agenda pages 14 - 17 refer.

Manager Strategy and Communications, Nicky McDonald presented the report and answered questions.

Transport

Manager Strategy and Communications, Nicky McDonald and Manager Transport and Solid Waste, Margaret Parfitt answered questions on the performance measures and targets, issues around peak hour travel time and road safety.

Water Supply

Senior Asset Engineer, Phil Ruffell noted the improvements that had been made to the water complaints system over the past 12 months. He answered questions regarding data collection and reporting, improvements to stormwater design, including future-proofing and flood protection modelling.

Environment

Group Manager Environmental Management, Clare Barton answered questions around the statutory timeframes for publically notified resource consents and fresh water monitoring and measuring, noting there was a national requirement for monitoring regardless of the weather conditions at the time.

Social

Group Manager Community Services Roger Ball and Manager Community Partnerships, Mark Preston-Thomas presented. There was discussion around service levels and the residents survey. New methods of data collection were being introduced including door-to-door surveying and contacting a database of residents due to a decrease in the use of landlines.

Parks and Active Recreation

Property Parks and Facilities Manager, Andrew Petheram presented. There was discussion around the Trafalgar Centre and the increase in usage, future events booked and positive feedback from the residents survey. Mr Petheram answered questions regarding swimming pools and the ageing population, and the upgrade of the great taste trail.

Economic

There was discussion around cruise ships coming to Nelson and the success of the All Blacks game and other multi-cultural events such as the cherry blossom festival.

Corporate

Manager Strategy and Communications, Nicky McDonald and Senior Accountant, Tracey Hughes presented. Ms Hughes tabled an additional document, a high level surplus variance analysis. There was discussion around consultation and a change of focus as the strategic team would now be taking responsibility for coordinating feedback and analysing responses.

Attendance: Councillor Barker left the meeting at 10.43am and returned to the meeting at 10.46am.

The meeting was adjourned at 11.14am and reconvened at 11.23am.

Resolved AUD/2018/043

That the Audit, Risk and Finance Subcommittee

Receives the report Draft Annual Report 2017/18 (R9204) and its attachment (A1983431); and

Refers all powers of the Audit Risk and Finance Committee relating to the adoption of the final Annual Report 2017/18 to Council provided that there are no material changes to the draft resulting from the audit.

Murray/Dahlberg Carried

Attachments

1 A2056090 - Annual report 2017-18 - High level breakdown of surplus

Recommendation to Council AUD/2018/044

That the Council

Notes the draft Annual Report 2017/18 has been prepared and will be audited before being presented to Council for adoption on 25 October 2018; and

Notes that if there are material changes to the draft resulting from the audit, these will be brought back to a specially convened Audit, Risk and Finance Subcommittee meeting prior to the Council meeting on 25 October 2018; and

Considers all matters relating to the adoption of the final Annual Report 2017/18 directly if there are no material changes to the draft resulting from the audit.

Murray/Dahlberg Carried

8. Carry Forwards 2017/18

Document number R9558, agenda pages 18 - 26 refer.

Senior Accountant Tracey Hughes answered questions and discussion took place regarding:

· Progress made with the carry forwards from 1 July 2018 and the distinction between capital projects and capital budgets

· Resourcing of teams, including new positions in the projects and asset management teams

· Update on the current capital projects, including the potential re-phasing of some projects

· The new quarterly report system would provide a comprehensive breakdown of all capital projects

· Chairs of committees would actively engage with the General Managers and be aware of current projects under their delegation.

Resolved AUD/2018/045

That the Audit, Risk and Finance Subcommittee

Receives the report Carry Forwards 2017/18 (R9558) and its attachment (A2042278).

Her Worship the Mayor/Barker Carried

Recommendation to Council AUD/2018/046

That the Council

Approves the carry forward of $4,945,000 unspent capital budget for use in 2018/19; and

Approves the offsetting of $1,145,000 of capital spent in 2017/18 against 2018/19 budgets; and

Approves the carry forward of $700,505 of unspent operating budget for use in 2018/19; and

Approves the release of $4,025,000 of 2018/19 capital budget unlikely to be spent as itemised in attachment 1; and

Notes savings in 2017/18 capital expenditure of $945,000; and

Notes that the total capital budget (including staff costs but excluding consolidations and vested assets) will be adjusted by these resolutions to a total of $41,868,000.

Her Worship the Mayor/Barker Carried

9. Draft Internal Audit Charter - Review September 2018

Document number R9637, agenda pages 27 - 38 refer.

Internal Audit Analyst, Lynn Anderson presented the report and discussions took place regarding:

· The current internal audit process and business processes

· Internal risk and process improvements, including resourcing

· Internal audit reporting to the Audit, Risk and Finance Committee

· Regular reviews of the internal audit charter.

Resolved AUD/2018/047

That the Audit, Risk and Finance Subcommittee

Receives the report Draft Internal Audit Charter - Review September 2018 (R9637) and its attachment (A2026584).

Dahlberg/Barker Carried

Recommendation to Council AUD/2018/048

That the Council

Approves the Draft Internal Audit Charter – Review September 2018 (A2026584).

Dahlberg/Barker Carried

10. Draft Annual Internal Audit Plan - 30 June 2019

Document number R9657, agenda pages 39 - 45 refer.

Internal Audit Analyst, Lynn Anderson presented and there was discussion around the two pre-determined audits. She noted the importance of reviewing areas where there could be potential for misappropriation of Council’s assets.

Mr Peters noted that the discussion around the Annual Plan had been very useful and thanked the officers for their assistance.

Resolved AUD/2018/049

That the Audit, Risk and Finance Subcommittee

Receives the report Draft Annual Internal Audit Plan - 30 June 2019 (R9657) and its attachment (A2026190).

Dahlberg/Barker Carried

Recommendation to Council AUD/2018/050

That the Council

Approves the Draft Annual Internal Audit Plan to 30 June 2019 (A2026190).

Dahlberg/Barker Carried

11. Exclusion of the Public

Resolved AUD/2018/051

That the Audit, Risk and Finance Subcommittee

Excludes the public from the following parts of the proceedings of this meeting.

Dahlberg/Murray Carried

Item	General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Particular interests protected (where applicable)
1	Update on Legal Proceedings Against Council	Section 48(1)(a) The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7	The withholding of the information is necessary: · Section 7(2)(g) To maintain legal professional privilege

Item

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Particular interests protected (where applicable)

Update on Legal Proceedings Against Council

Section 48(1)(a)

The public conduct of this matter would be likely to result in disclosure of information for which good reason exists under section 7

The withholding of the information is necessary:

· Section 7(2)(g)

To maintain legal professional privilege

The meeting went into public excluded session at 12.33pm and resumed in public session at 1.01pm.

There being no further business the meeting ended at 1.01pm.

Confirmed as a correct record of proceedings:

Chairperson Date

Item 8: Quarterly Report 1 July - 30 September 2018

Audit, Risk and Finance Subcommittee

13 November 2018

REPORT R9774

Quarterly Report 1 July - 30 September 2018

1. Purpose of Report

1.1 To inform the members of the Audit, Risk and Finance Subcommittee of the financial results of activities for the three months ending 30 September 2018, compared to the approved operating budget.

1.2 To highlight any material variations.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Report 1 July - 30 September 2018 (R9774) and its attachments (A2072704 and A2076104).

3. Background

3.1 The financial reporting focuses on the three month performance compared with the year to date approved budgets.

3.2 Unless otherwise indicated, all measures are against approved operating budget, which is the 2018/19 Long Term Plan budget plus any carry forwards, plus or minus any other additions or changes as approved by Council throughout the year. For the purposes of quarterly reporting staff have assumed that the Carry Forwards report (recommended for approval by this subcommittee), will be approved by Council and all adjustments arising from that report have been factored in.

3.3 Officers have assessed budgets and applied a range of phasing mechanisms depending on the nature of the expenditure to reflect the anticipated timing of actual income and expenditure.

3.4 In order to meet reporting timeframes, accruals for both operating and capital expenditure are made for transactions in the third month of each quarter, reversing in the first month of the following quarter. The effect of these accruals on the year to date results will decrease as we go through the year.

3.5 The contents of this report will be a work in progress, and staff welcome feedback from all committees. In the interests of efficiency it is proposed to keep the contents of the quarterly reports standard to all committees and avoid customisation where possible.

4. Discussion

4.1 For the three months ending 30 September 2018, the activity surplus/deficits are $0.6 million favourable to budget.

4.2 The most significant variances are:

· $1.1m unbudgeted income reflecting the special dividend declared by Port Nelson Limited in September 2018 and the 2017/18 Nelson Airport Limited dividend that was expected in the last financial year but declared too late to be accrued.

· $0.5m ahead of budgeted income for Forestry harvesting, with offsetting harvest costs.

· $170,000 behind budget for income from public transport tickets. This reflects that the bus service was budgeted as a gross contract (all income and expenditure flowing through Council), but this has not yet been put in place. There are offsetting savings in expenditure.

· Programmed expenditure $0.3 million behind budget; most notably $224,000 grants and remissions (mostly Saxton Field).

· Salaries and wages are currently on budget, with all back pay processed in September. However business unit overheads are currently $221k ahead of budget, particularly insurance and relieving/temp staff.

· Unbudgeted recovery costs from the February 2018 storms are still being incurred in the Parks and Transport activities particularly, $186k YTD.

4.3 Financial information provided in Attachment 1 has changed in this report and includes:

4.3.1 A financial measures dashboard with information on rates revenue, operating revenue and expenditure, and capital revenue and expenditure. The arrow icon in each applicable measure indicates whether the variance is increasing or decreasing and whether that trend is favourable or unfavourable (green or red).

4.3.2 Operating income and expenditure displayed against budget for both committee and category. Significant variances are noted against committees. Each committee will receive a more detailed analysis of variances by cost centre.

4.3.3 A treasury measures dashboard with a compliance table (green = compliant), a forecast of the debt/revenue ratio for the year where available, and a graph showing debt levels over a rolling 13 month period.

4.3.4 High level balance sheet. The current year balance sheets do not include consolidations. Balance sheets represent the previous month (for quarter 1 the most recent balance sheet is for August) as reporting deadlines do not allow time to complete a number of processes that affect the balance sheet.

4.3.5 A debtor analysis graph over 13 months, clearly showing outstanding debt levels and patterns for major debt types along with a summary of general debtors > 3 months and over $10,000 and other debtors at risk.

4.3.6 Two capital expenditure graphs – The line graph records actual expenditure against approved budget, and quarter one forecast (current understanding of most likely outcome). The bar graph records year to date expenditure against forecast by committee.

4.4 Capital expenditure is $1.7 million under approved budget year to date (including NRSBU).

4.4.1 Project updates are included in attachment 2 for projects with a budget of more than $1 million in the 2018/19 financial year.

4.4.2 Project progress is analysed based on three factors; quality, time and budget. From the consideration of these three factors the project is summarised as being on track (green), some issues/risks (yellow), or major issues/risks (red). Projects that are within 5% of their budget are considered to be on track for the budget factor.

4.5 The quarter one forecast for capital expenditure is $937,000 less than approved budget ($40.9 million vs $41.9 million excluding vested assets and consolidations). Project managers will have a better feel for forecasts as we move through the year.

4.6 Key performance indicators

The pie chart below shows overall Council performance to 30 September against performance measures set in the Long Term Plan. To date, 64% of measures are on track to achieve the target by the end of the financial year.

Other committees will receive more detailed information including a table showing the measure, target, a comment on performance and the result to date for the performance areas relevant to their delegations.

5. Other notable achievements or issues

5.1 Audit NZ have now completed their audit of the 2017/18 Annual Report. The audit proceeded smoothly, on schedule and on budget for Audit NZ, although they experienced the usual log jam of annual reports to review at senior levels.

5.2 The 2017/18 Annual Report was adopted by Council on 25 October 2018.

Author: Tracey Hughes, Senior Accountant

Attachments

Attachment 1: A2072704 - Dashboards and Charts to 30 September 2018 ⇩

Attachment 2: A2076104 - Capital projects greater than $1m budget in 2018/19 ⇩

Item 9: Health Safety and Wellbeing Performance Report

Audit, Risk and Finance Subcommittee

13 November 2018

REPORT R9828

Health Safety and Wellbeing Performance Report

1. Purpose of Report

1.1 To provide the Subcommittee with a quarterly report of health, safety and wellbeing data collected over the July to September quarter of 2018.

1.2 To update the Subcommittee on key health and safety risks, including controls and treatments.

2. Summary

2.1 Injury, illness, hazard and near miss data for the period does not indicate any concerning trends.

2.2 Security incidents at libraries have been reported more frequently than for the same period last year.

2.3 There has been no significant changes to the ‘Key Health and Safety Risks’ section of the report.

3. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Health Safety and Wellbeing Performance Report (R9828) and its attachment (A2069618).

4. Background

4.1 Councillors, as ‘Officers’ under the Health and Safety at Work Act 2015 (HSWA), are expected to undertake due diligence on health and safety matters. Council’s Health and Safety Governance Charter states that Council will receive quarterly reports regarding the implementation of health and safety. Council has delegated the responsibility for health and safety to the Audit, Risk and Finance Subcommittee.

4.2 Health, safety and wellbeing performance data reports provide an overview of health and safety performance based on key lead and lag indicators. Where a concerning trend is identified more detail is provided in order to better understand issues and implement appropriate controls.

4.3 Reporting on key health and safety risks provides further depth and detail to the health and safety risks reported in the organisational risk report.

5. Discussion

5.1 Data Reports

5.1.1 Security incidents at Elma Turner and Stoke libraries are being reported with greater frequency than the same period last year. No specific group or cause has been identified as contributing significantly and the seriousness of these events varies. This is being monitored carefully so further controls can be implemented if required.

5.1.2 The average rate of over-speed events recorded by E-Road remains well below that of previous years. Most over-speed events occur at locations where the speed limit changes. E-Road has advised that the system cannot be adjusted to allow an area of tolerance at speed limit changes consistent with the Police enforcement approach.

5.2 Key Health and Safety Risk Update

5.2.1 All key health and safety risks have been assessed to remain as medium risks.

5.2.2 Where new treatments have been planned or have been implemented as controls since the last report this is indicated by red text in the attachment.

5.2.3 Where possible timeframes have now been indicated for treatments.

5.3 Due Diligence Activities

5.3.1 During this reporting period Councillors Walker and Rutledge participated in a safe work observation at the Neale Park pump station construction site.

5.3.2 SLT members completed safe work observations or site inspections at Stoke Memorial Hall, Saxton Stadium, Neale Park Pump Station, Trafalgar Park and the Monaco foreshore.

5.4 General Work Programme

5.4.1 A refresher training program has been completed in libraries to reduce discomfort, pain or injury (DPI) as a result of book handling.

5.4.2 The review of responses to the RFP for a new health and safety information system has been completed and reference checks are underway.

5.4.3 A Civic House earthquake drill is planned to coincide with the national shakeout in October

5.5 Staff Wellbeing Initiatives

5.5.1 A series of staff health checks have been completed.

5.5.2 A male mental health awareness workshop called “one for the blokes” was well attended in July.

5.5.3 Working well together workshops have been completed for all workgroups, further sessions are planned for new staff.

5.5.4 A range of activities are planned for mental health awareness Month (October).

Author: Malcolm Hughes, Health and Safety Adviser

Attachments

Attachment 1: A2069618 - Health Safety and Wellbeing Performance Report July - September 2018 ⇩

Item 10: Internal Audit - Quarterly Progress Report to 30 September 2018

Audit, Risk and Finance Subcommittee

13 November 2018

REPORT R9772

Internal Audit - Quarterly Progress Report to 30 September 2018

1. Purpose of Report

1.1 To update the Audit, Risk and Finance Subcommittee on the internal audit activity for the quarter to 30 September 2018.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Internal Audit - Quarterly Progress Report to 30 September 2018 (R9772).

3. Background

3.1 Under Council’s Internal Audit Charter approved by Council 15 October 2015 (and the draft Internal Audit Charter before Council on 15 November 2018), the Audit, Risk and Finance Subcommittee requires a periodic update on the progress of internal audit activities relative to any current Internal Audit Plan approved by Council.

3.2 The report Draft Internal Audit Plan to 30 June 2019 presented to the Audit, Risk and Finance Subcommittee meeting of 25 September 2018 recommends that for the year to 30 June 2019 there should be a limit of two planned and one possible unplanned internal audits. The approval for this Plan comes before Council on 15 November 2018.

4. Progress of Internal Audit Activity

Outstanding Audit Reports from the Internal Audit Plan to 30 June 2018

4.1 There remain two outstanding audit reports from the last financial year:

· Monitoring and Management of Contractor Performance

· Council-Owned Property and Facilities Maintenance

As there has been a notable time lapse since the field work for these audits was completed (July 2018), the Chief Executive, Group Manager Corporate Services and Chair of the Subcommittee have been informed of the draft findings. These reports are still in the review stage and will then be populated with Management Responses. They had not therefore been presented to the Senior Leadership Team at the date of this progress report.

4.2 Neither Draft Audit Report reveals information not already known to management.

Outstanding Internal Audit Actions from Internal Audits Prior to 30 June 2018

4.3 Internal Audit is providing guidance to officers with overdue actions from previous internal audits to help limit unacceptable risk to Council.

Internal Audit Activity related to the Draft Internal Audit Plan to 30 June 2019

4.4 Internal Audit is contributing with the analysis of essential requirements for a centralised contract management system solution which will be practical, affordable, fit for purpose, and which will address the critical primary issues that have arisen from these and previous contract-related audits. It will also take into account the guidance from a number of sources, including the Office of the Auditor General and NZ Government Procurement.

5. Conclusion

5.1 The internal audit function is actively working towards systems improvements that are aligned to the Draft Internal Audit Plan to 30 June 2019 and to Council’s objectives to limit unacceptable risk exposure.

Author: Lynn Anderson, Internal Audit Analyst

Attachments

Nil

Item 11: Quarterly Key Risks Report - 1 July to 30 September 2018

Audit, Risk and Finance Subcommittee

13 November 2018

REPORT R9524

Quarterly Key Risks Report - 1 July to 30 September 2018

1. Purpose of Report

1.1. To provide information to the Audit, Risk and Finance Subcommittee on the key organisational risks.

2. Recommendation

That the Audit, Risk and Finance Subcommittee

Receives the report Quarterly Key Risks Report - 1 July to 30 September 2018 (R9524) and its attachments (A2069462 and A2079218).

3. Background

3.1 At the meeting of the Subcommittee held on 14 August 2018, the Subcommittee requested that the quarterly risk report be revised. The report now includes explanatory comment on the heat map depicting the key organisational risks. These appear in the body of the report. Further detail on each of the key organisational level risks continues to be included in Attachment 1 (A2069462), with the following additional information:

· Controls, and the role accountable for the control

· the expected effect of the control

· commentary on the expected effect of planned treatments

· the planned timeframe for implementing the treatment

· the timeframe for the next planned review of the treatment.

Council’s risk criteria, adopted 10 August 2017 is included in Attachment 1, to assist discussion.

3.2 Section 4 includes summary information from each Group Manager about emerging risks which are specific to their programmes of work; these are generally not organisational level risks, and are managed at Group level. Group Managers make the relevant Committee Chair and Deputy Chair aware of these Group level risks. Additionally, formal reporting to Committees of the key risks related to individual projects and programmes of work will occur through the new structure for quarterly reporting to Committees.

3.3 Reporting is now presented per annual plan year quarter to align with other quarterly reporting to committees. Changes to the format of this report and its attachments are in progress and will continue to evolve.

3.4 Changes have been made to the Corporate Report to include progress reports on projects with current year budget of $1,000,000 or more, and includes commentary on key risks associated with those projects.

3.5 The Subcommittee requested information on Council’s processes for: risk identification, management, allocation of risk to the correct person, and improvement of controls to ensure they are effective. This information is provided in Attachment 2 (A2079218). As part of a future assessment of the effectiveness of Council’s risk management framework, changes to Council’s risk criteria could be proposed.

4. Summary of Key Organisational risks

4.1 At end of quarter 1 (to 30 September 2018), the organisation’s known key risk areas are as summarised in the heat map, and in the table below:

ID	Risk Area	Rating	Owner
1	Lifeline service failure from natural hazards and similar events	High	Group Manager Infrastructure
2	Illness, injury or stress from higher hazard work situations	Medium	Group Manager Corporate Services
3	Loss of Council reputation from negative public perceptions	Medium	Group Manager Strategy and Communications
4	Loss of service performance from ineffective contracts and contract management	Medium	Chief Executive
5	Council service delivery compromised by information technology failures	Low	Group Manager Corporate Services
6	Compromised decision making and public information from incomplete and difficult to access records	Medium	Group Manager Strategy and Communications
7	Council work compromised by loss of and difficulties in replacing skilled staff	Medium	Manager People and Capability
8	Fraud, corruption or theft leading to financial loss and reputational damage	Medium	Group Manager Corporate Services
9	Failure to secure private information leading to reputation loss and legal challenge	Medium	Chief Executive
10	Legal liability and reputation loss from inadequate consideration of the law in decision making	Medium	Group Manager Strategy and Communications

4.2 Risk area 1, maintaining lifeline services, is not currently managed to within Council’s risk criteria – that is, for a risk rated as “High”, the timing for implementing action is as soon as practicable but not more than 2 months; for risk area 1, the actions intended to reduce the risk rating to “Medium” will not be completed within a 2 month timeframe.

4.3 Changes from the previous quarter 2 report are:

4.3.1 Risk 5 - “Council service delivery compromised by information technology failures” was reported with a consequence of “moderate” and a likelihood of “unlikely”. Following work on the proposed treatments, the consequence is now assessed as “minor”, with a likelihood of “unlikely”. The residual risk rating is reduced to “low”.

4.3.2 The key improvements are:

· the set-up of a redundant site which provides the ability for Council to “switch over” the running of information systems to another location within New Zealand, and so providing continuity of IT services

· the introduction of “Virtual Private Network” (VPN), which allows staff to remotely access Council information systems with the same level of service and functionality provided from inside Council offices

· the replacement of desktop computers with a laptop or tablet, enabling mobile working and remote access for the majority of Council staff

4.3.3 Risk 7 - “Council work compromised by loss of and difficulties in replacing skilled staff” was reported with a consequence of “minor” and a likelihood of “likely”. Consequence continues to be assessed as “minor”, with likelihood now assessed as “possible”, due to the overall trend of reducing turnover. The residual risk rating for this area remains at “medium”.

4.4 The remaining key organisational risk areas all have a residual risk rating of “Medium” and are currently being managed to within Council’s risk criteria. Further information for each of the key organisational risks is included in Attachment 1. Planned treatments are intended to lower the likelihood or consequence rating, and where further treatments are planned, the anticipated risk movement is indicated in the attachment by an arrow.

5. Group Level Information – Summary of Emerging Risks

5.1 Infrastructure Group: Staff resourcing is the biggest challenge to successfully deliver the capital work programme. At the end of quarter 3, there were seven vacancies in the Capital Projects business unit, two vacancies in the Utilities business unit, and two vacancies in the Transport and Solid Waste business unit. This has resulted in increased workload across all Infrastructure Group business units. With an increased focus on quality of deliverables and budgetary control, there is potential that project timeframes may slip. The potential impact, and mitigations, are being assessed.

5.2 Community Services Group: There are significant projects which are stretching staff resources and displacing other work. Whilst these items do carry various levels of risk – mainly reputational - they also represent opportunities for Council. Examples include the Bay Dreams music festival, the future of campground governance, the Stoke Library weather tightness repairs, and the Maitai Valley projects.

5.3 Environmental Management Group: there are no significant emerging risks to report with regards to delivery of regulatory or environmental services. Business Unit Managers within the Group continue to monitor and mitigate operational and project level risks that arise, alongside the change management for recent business improvements.

5.4 Strategy and Communications Group: the current year has brought higher than previous levels of reactive work in some areas. This puts pressure on Council’s ability to deliver the agreed work programme. The impact of this is being assessed. Another challenge is an increasing amount of messaging across social media, related to Council activity and performance. Officers are investigating how others in the sector respond to this challenge.

5.5 Corporate Services: there are no key emerging risks to report with regards to delivery of corporate services. Some challenges related to accommodation suitability for staff teams are being worked through. The ongoing programme of work for IT is continuing, and is designed to reduce the level of customisation of key organisation wide information systems – this reduces the level of support effort needed, and reduces the likelihood of loss of system availability to staff when regular upgrades are undertaken.

Author: Arlene Akhlaq, Manager Business Improvement

Attachments

Attachment 1: A2069462 - Key organisational risks report - Quarter 1 July to September 2018 ⇩

Attachment 2: A2079218 - Supplementary report - Council's risk management processes ⇩