One of the dilemmas of financial planning is to what extent
future problems can be predicted and just how much time and resources
should be committed to dealing with a problem, which has not yet arrived.
A risk management approach is not intended to be labour intensive, nor
is it infallible in its predictions; rather it is a tool for identifying
which areas need further examination.
Adult services have a number of areas where financial
risks are emerging. The issue of preserved rights is a recent example.
Below are two examples that have occurred in recent Joint Review reports.
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CASE EXAMPLES
Example 1
Better medical care and a change in social attitudes
have resulted in more children with profound physical disability
and more challenging behaviour being cared for. This has caused
a growth in demand for children's services and now is creating a
demand for adult services. Some of the residential placements can
be extremely expensive. Few authorities have accurately predicted
how many children are in transition and how their needs can be met
in a cost effective manner.
Example 2
Better resuscitation and trauma care have resulted
in higher survival rates of people with head injury (often sustained
in road traffic accidents) and higher survival rates for people
with strokes. This has lead to an increase in demand for rehabilitative
care and often substantial and ongoing care packages when people
return home.
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Financial risk management exercises can be done in
a number of ways to fit with local circumstances. The process should
begin with a "brainstorm" creating a list of any issue which may cause
budget pressures in the next 1-3 years. From this list another list
can be shaped which consolidates issues raised and disposes of the
highly improbable. This part of the process could involve service
users, carers and front line staff as a part of a wider consultation.
Risk assessment on the final list should be done by mangers with responsibility
for the service in question. A detailed analysis should be completed
on each of the major risks identified. Less important risks could
be considered but in less detail and low risks discarded. This could
be done as a part of the normal business planning cycle or as a part
of a Best Value review.
A risk management approach can be used to identify
such trends, begin the process of analysing the impact and start the
process of minimising the financial impact.
An example of a risk management form would look like
this.
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Concern
|
Likelihood (A) 1-5
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Seriousness or impact (B) 1-5
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Risk Factor (AXB) 1-25
|
|
Increase in numbers of children with profound
disabilities
|
5
|
4
|
20
|
|
Increase in people with head injury/stokes
|
4
|
4
|
16
|
|
Increase in people with learning disabilities
developing dementia
|
5
|
3
|
15
|
|
Increase in people on enhanced CPA
|
3
|
3
|
9
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- All concerns with a rating of 18+ would be selected for detailed
analysis and an action plan devised to minimise the risk
- Those with a rating of 11-17 considered in less detail and held
under review
- Those with a score of less than 10 probably need no further action.
The benefits of this approach is not only the early
identification and management of risk, it is also to get stakeholders
to appreciate, that in a constantly changing environment new pressures
will arise and will question the current deployment of resources.
Financial risk management exercises can be done in a
number of ways to fit with local circumstances. The process should begin
with a "brainstorm" creating a list of any issue which may cause
budget pressures in the next 1-3 years. From this list another list can
be shaped which consolidates issues raised and disposes of the highly
improbable. This part of the process could involve service users, carers
and front line staff as a part of a wider consultation. Risk assessment
on the final list should be done by mangers with responsibility for the
service in question. A detailed analysis should be completed on each of
the major risks identified. Less important risks could be considered but
in less detail and low risks discarded. This could be done as a part of
the normal business planning cycle or as a part of a Best Value review.
A risk management approach can be used to identify such trends, begin
the process of analysing the impact and start the process of minimising
the financial impact.
An example of a risk management form would look like this.
|
Concern
|
Likelihood (A)
1-5
|
Seriousness or impact (B)
1-5
|
Risk Factor (AXB)
1-25
|
| Increase in numbers of children with profound disabilities |
5 |
4 |
20 |
| Increase in people with head injury/stokes |
4 |
4 |
16 |
| Increase in people with learning disabilities developing
dementia |
5 |
3 |
15 |
| Increase in people on enhanced CPA |
3 |
3 |
9 |