Risks in government institutions.Where do the buck stop?

A new government comes with its agenda or objectives as provided for in its manifesto. As witnessed, the next thing is to appoint the right people to execute and implement the manifesto to the latter. Quite often, and history has it that the President means well but failures in his circle of power reflects badly on the president. Hardly have we heard a president being sued or linked to massive scandals, well at least directly. All the major scandals of misuse of funds such as Kazi kwa Vijana, Maize Scandal, Anglo leasing, Free primary education moneys and many more are actually orchestrated much lower in the ranks of power. In fact, it is much easier to be a pilot of Boeing 787 than trying to run a country as much as a plane is such complex machinery. When a plane is flying, it is exposed to a myriad of risks and a small error could cost lives in milliseconds. Despite this, a pilot can afford to sit in the cockpit with a glass of champagne. Question is, how does this work? The answer is simple, risk management. Barely every risk area has been identified in the plane and a very advanced monitoring system implemented using dashboards that the pilot needs to interpret and act accordingly based on the indicators of the possible risks. This is why the pilot can relax with her champagne as long as the indicators are within his comfort zone. I strongly believe that the State house or the office of the President needs to be equipped with a cockpit such that there are gauges from every ministry, parastatal, project and so on, for the President to see where risks may be arising and ensure that his soldiers are doing the right thing so he can continue sipping his champagne. This can be done by implementing a comprehensive risk management system in all arms of the government. Treasury Circular 3/2009 Institutional Risk Management Policy Framework, though not as comprehensive as it should be is a good foundation to use to ensure that all government institutions have an effective Risk Management system only if enforced. A thorough risk management system in these institutions will entail a detailed risk assessment with mitigation strategies being put in place for a start. But we need to monitor close to real time as possible by developing risk indicators, compliance system and action tracking to ring warning bells where things are not being run as they should. If there is no efficient response to these warning bells, then a system of escalation to the highest office (cockpit in state house) that cannot be manipulated is then activated. Lets take an example of the honorable promise of Kshs.6 Billion interest-free loans for youth and women. Some institution will be given this mandate and if there is money-hungry officials, then you can rest assured that there will be a total failure of this just like the kazi kwa vijana. But with Risk Management, we will identify key risks such as funds being extended to people who are not needy, the officials creating dummies for themselves to get the funds, funds may be given to people with no clear plan of spending the funds hence failure to meet expected objectives and many other risks. We would therefore put mitigation strategies such as using banking institutions, ensuring appropriate recipient age limits are set, requiring incorporated institutions and conducting due diligence, requiring the recipients to be submitting monthly returns of their business performance, setting a criteria for qualifying for the loan, training the prospective recipient on business, support services in running the business etc. This on

its own will not resolve the problem and therefore the need for close to real time monito ring and continuous improvement, therefore, the cockpit. The cockpit gauges needs to be created. To start with, I would like attestations from the officials that they have complied with the mitigation strategies noted on whatever frequency we decide reasonable. All actions that need to be implemented would be critical that they are monitored and those that are lagging behind are flashed out as they mean the risks are still very high. I will want to see indicators that will highlight how these risks are being managed. For example, this could be a collection of data on say, amount of cash disbursed per day/week, distribution of recipients by location and gender per week, classes of business types of recipients and amounts under each class per week, number of training sessions and number of participants per week, profitability trend of the recipient business and so on. I will have pre-set limits on all these aspects of compliance, actions and indicators such that I can tell when things are not at normal levels and escalation is required. The challenge is to ensure that the President as the chief custodian of the country risks must have a snapshot of all these and be able to know the performers and non-performers, be proactive and not wait for surprises when all the money has been misused. It is rightful to say that the buck stops with the President and therefore its upon him to set the right policies/rules/regulations to give risk management the home it desperately needs and implement systems that will ensure transparency and accountability on how government business is being managed applying risk-based decision making and proactive management of uncertainties that will hinder achievement of your impressive manifesto. By Gilbert Mwalili, Protecht Ltd providing leadership in risk management. gilbert.mwalili@protecht.co.ke Follow Us on Twitter @Protecht_Africa