CCR City Deal
I’ve always argued that a more efficient and effective public sector depends on not sticking to practices that have little impact but keeping us safe – but pushing for the kind of innovative practices that make things work better for the communities we serve. All organizations, whether in the public, private or community sectors, need people to understand and take calculated risks. If everyone complies with practices that don’t really work or make a difference but keep us safe and refuse to take risks – progress is highly unlikely.
Ensuring a sustainable and resilient future for CCR depends on progress. This is not only because the region is considered “backward” in many indicators of competitiveness and productivity, but because the incidence of poverty and inequality is still very high and the gap between the most and least prosperous places is still very wide. CCR operates a £500 million open-ended fund through its City Deal programme. This is open to all – provided it fits with our goals, objectives and investment framework. This sees the role of the public bodies behind the CCR as one of the market makers and co-investors, seeking risk versus reward and meeting around some of today’s great social and economic challenges. Reward in this context means economic impact and shared prosperity and therefore risk comes with great responsibility.
The responsibility part isn’t always easy or straightforward. If things go wrong and despite the world’s sweeping safeguards, there will be occasions when they do, it is only right that people are held accountable in appropriate ways. However, the blame and ruthless hostility that can often accompany it, can feel wholly disproportionate to well-intentioned endeavors. No wonder there is sometimes an aversion to any kind of risk at all. However, we believe the best way to see risks is that they are something that needs to be constantly understood and managed.
Our new Enterprise Risk Management policy co-exists with our investment framework and helps to understand our risk environment by creating context, identifying and analyzing risks, assessing risks and finally responding to risks. It helps set the tone for our approach and establish structures and systems that recognize the environment in which risks operate. As an economic development programme, our risks differ from partner local authorities that operate services ranging from public health to education and social care. However, our risk environment is an important one where solid evidence, due diligence, assessments, data and analysis must sit hand in hand with sound judgment.
So our approach was:
- Be clear about ‘red lines’ and tolerance limits for different types of activity
- Maintaining our goal and ensuring investments and the process leading to those investments not only reflect our vision and goals – they support our values and ideals
- Speak to a culture that considers risk – where we manage risk throughout the life of the project and the entire program and ensure that risk is proportional to both reward and responsibility
- Establish key lines of defense by utilizing our project lead to own risk, investment committee and program board to oversee risk, audit to achieve independence for the risk management process and regional cabinet for eventual project approval
- Demonstrate good governance through a system of interlocking bodies, committees and audits
- Practicing responsible investing – with a focus on ESG, equity, diversity and inclusion, and continuous work to develop local impact policies to recycle money and support real wages and fair work.
- Developing Carbon Literacy through the Risk Process – This is an ongoing program that is built into our revised investment strategy and ensures that net zero targets are enshrined in risk assessments.
- Discover legal and financial risks with our expert advisory teams and robust due diligence
- Focus on continually adapting to the overall risk environment
Culture can either support or limit innovation and progress. Dealing with failure is part of this, and while I go on to say, failure by omission is often the biggest failure of all, which doesn’t mean we should simplify already-related failures as well. Most of the successes encountered problems and challenges along the way – what ultimately made them successful was adaptation, change of course, contingency planning, and perseverance. Managing risk intelligently and with integrity requires a cultural approach to risk which is why we take risk education seriously.