Strategic Risk Management Framework

High Level Risk/Incident

Examples Of Possible Impact/ Consequence

Examples Of Charity Commission Response

A. Risks within the charitable sector

1. Poor governance/mismanagement of charities

a. inefficient/ineffective use of charitable resources.

b. loss of resources for beneficiaries and potential

c. failure of a charity. failure of services or suffering caused to beneficiaries.

d. disputes or legal action against charities

e. potential for fraud to occur.

f. loss of confidence in the charity or its trustees/employees.

a. Ensuring that the Commission’s legal and regulatory framework is effective, relevant and up to date (eg through our review of the register and production of regulatory reports)

b. Ensuring that the legal framework is properly understood and utilised effectively, taking due account of risk to secure a proportionate solution

c. monitoring charity returns and accounts using a series of "triggers" to alert us to possible areas of concern across a wide range of issues, eg:

• whether charitable funds may be at risk
• whether funds are being correctly used
• whether trustees’ expenses appear reasonable
• whether the charity appears to be operating legally
• whether there are any areas where we can provide advice and guidance.

d. evaluating and responding appropriately to complaints about mismanagement and abuse, through use of our monitoring triggers

e. concentrating advice & guidance activity including review visits on those charities which deal with significant sums of money and/or assets or are dealing with areas where beneficiaries are most at risk (eg children, cancer patients, community care, animals etc).

f. improving our intelligence on what is happening within the sector and working collaboratively with other agencies and regulatory bodies to identify risks.

g. Consideration at the point of registration, to identify potential problems in charities at an early stage of their relationship with the Commission.

h. Improvement of transparency and accountability of charities through public access to information on charities, publicity on action taken to put charities back on track etc.

i. programme of advice and guidance for charities to support them in managing their own risks in a proactive fashion to reduce the likelihood of a major breakdown in control arising (eg through advice by way of; telephone helplines; training events and seminars; guidance leaflets covering areas of common difficulty or concern etc).

j. working with other bodies such as umbrella bodies and support organisations etc

k. use of our powers where appropriate to facilitate better use of charitable resources (eg via schemes and orders).

l. ensuring compliance by charities with the legal and regulatory framework

2. Inappropriate action by a charity (including an unregistered, exempt or excepted charity) or its trustees/ employees (including abuse such as fraud and other illegal activity)

a. trustees/employees obtaining illegal financial or other inappropriate gain from a charity.

b. inappropriate treatment of beneficiaries

c. inappropriate use of funds for non-charitable purposes or otherwise outside the charities remit (eg in support of a political, ideological or other cause)

d. other consequences covered in 1. above.

a. monitoring programme (eg on trustee benefits) to detect issues of concern

b. evaluation and investigation of complaints from the public, identified through monitoring or intelligence or other sources.

c. using our powers where appropriate, eg to open inquiries, appoint receiver/managers etc.

d. liaison and working with other enforcement agencies, prosecuting authorities and local authority licensing bodies

e. publicity on action taken to rectify abuse.

f. providing opportunity for whistleblowers to contact the Commission

g. programme of review visits to charities and follow up action as required

h. progressing action with other Government Departments to improve access to information, etc to enable the Commission to operate as an effective regulator

i. other responses set out in 1. above as appropriate.

3. Inappropriate actions in the name of charity by unregistered organisations (eg "scam charities" and non-charitable bodies)

a. fraudulent or inappropriate fundraising eg through street collections, rose-selling etc

b. misrepresentation through people and organisations carrying out activities while claiming to be a charity.

c. loss of resources and/or reputation to bona fide charities

d. reduced public confidence in the charitable sector

a. increasing public awareness on giving safely through leaflets and other guidance e.g. our website

b. increasing public awareness of the role and powers of the Commission and opportunities for providing us with information (eg through fund-raising hotline).

c. liaison and working collaboratively with other statutory bodies and local authority licensing bodies to enable them to take appropriate action.

d. other action under 1. And 2. above.

4. Registration of an inappropriate organisation

a. registration of a charity with inappropriate trustees (eg paedophiles, bankrupts) who put a charity and/or its beneficiaries at risk.

b. registration of a charity with non-charitable objects

c. reduced public confidence in the Commission as an effective regulator

d. reduced public confidence in the charitable sector.

a. use of risk assessment to identify those applications which require a higher degree of scrutiny before registration.

b. for all high risk applications, checks on the proposed Trustees including checks for bankruptcy, disqualification as a Director, checks on address/telephone number, and checks to ensure that proposed Trustees have not previously been disqualified form acting as Trustees under Section 72 (e) of the Charities Act.

c. for charities intending to operate with vulnerable groups of people or animals, checks against a range of external data sources to confirm the bona fides of the proposed Trustees

d. review of a charity’s proposed objects and governing document to ensure compliance with the law and with best practice.

e. where appropriate, review of the applicant’s proposed business plan.

f. in cases where the charity will involve children, a reviewevidence of the applicant’s child protection policy.

g. in cases deemed to be complex or higher risk, meeting with the applicants to discuss their application;

h. in cases considered to be high risk, referring the charity for monitoring, support, or investigation action following registration, as appropriate.

5. Failure or scandal at a "major" household name charity

a. loss of public confidence in the financial management capability of charities leading to financial difficulties and undermining confidence in the sector.

b. loss of public confidence in the moral/ethical integrity of charities

c. weak control resulting in significant and highly-publicised fraud.

d. inappropriate governance leading to abuse of position/power (financial or social)

e. potential loss of support and/or services causing suffering to beneficiaries of charities

a. taking a risk based approach to regulation by targeting Commission resources on high-value and high-profile charities.

b. working closely with national charities (including interchange and CIFs where appropriate) to facilitate and promote good governance and best practice

c. detailed scrutiny of the accounts for the largest charities

d. proactive management of external communications

e. other action in 1. and 2. above

B. Risks relating to the Charity Commission itself

6. Inadequate or unclear arrangements in place for governing the Commission and delivering Commission business

a. Inappropriate, inadequate or unclear management structure, reporting lines or levels of responsibility.

b. Lack of management grip, accountability and appropriate decision making

c. Unclear direction and leadership

d. Failure to achieve key business objectives

e. Failure to identify and comply with new legislative requirements

f. Ministers not fully briefed or aware of Commission issues.

g. Poor reputation and loss of public confidence in the Commission.

h. NAO criticism

i. PAC are critical of the Commission causing Parliament to lose confidence

j. Non-compliance with legislation eg health & safety, human rights & freedom of legislation, etc.

a. Arrangements in place for Accounting Office to ensure our accountability to Treasury, NAO and Parliament eg annual statement of internal control

b. Clear Board and Committee structure and statement of our Governance principles and arrangements.

c. Records kept of our decisions, and meeting minutes and actions.

d. Statements and arrangements for the conduct, discipline and propriety of our staff.

e. Procedures in place for appointments of senior managers.

f. Arrangements for appropriate delegation of responsibility, including Assistant Commissioner powers for relevant staff.

g. Legal provisions on Commission powers, authority and constitution

h. Development of arrangements for managing change.

i. Internal control systems, policies and procedures eg health & safety, recruitment, training & development, procurement, finance etc

j. Iinternal audit service to check soundness of systems

7. Public misunderstanding of the role and powers of the Charity Commission which could lead to a loss of public confidence in its role and competence

a. public misconception that Commission is able to control the day-to day actions of charities (eg on use of resources, ).

b. public misconception that, by receiving charitable status, an organisation has been "Kitemarked" or accredited by the Commission in terms of the way it is run.

c. public misconception that the Commission monitors exempt and excepted charities and is responsible for any failings in this area

a. increasing public awareness of the role and powers of the Commission via its web site, publications and the media.

b. use of leaflets, website, etc to convey our regulatory stance and business priorities

c. increasing public awareness via attendance at seminars, conferences, roadshows, stands at sector events etc

d. liaison arrangements in place with other Government Departments to improve understanding of the role and powers of other regulators

8. Commission not responding quickly, correctly or appropriately (eg to requests for advice, complaints about mismanagement or abuse etc).

a. dissatisfaction with service

b. lack of success in high profile litigation.

c. public loss of faith in Commission’s ability to police the sector.

a. risk based and proportionate approach to regulation based on current business priorities and available resources

b. internal management control systems which monitor performance against targets and identify cases requiring urgent action.

c. fast tracking of cases where the risk is perceived to be highest.

d. System of referral and follow up of causes for concern.

e. Quality Control reviews to ensure compliance with laid down procedures and processes.

f. Internal systems which ensure proper advice taken where needed before action taken (eg Operational Guidance, legal and accounting advice).

g. Legal advice accurately identifies the relevant legal framework and identifies how best to apply it, taking due account of risk to achieve an effective and proportionate outcome consistent with it.

h. Customer service initiatives aimed at making service more effective (eg helplines) and complaint managers to deal with when things go wrong.

i. increased use of Helplines, website, to exchange information and provide advice and guidance.

j. Reasons given for decisions made

k. system for reviewing decisions and complaints

l. clear policies established to guide operational work

m. training and dev leopmentdevelopment arrangements for our staff

9. Failure of IT or other systems including failing to keep register and the Website up to date and accurate.

a. potential for security failures

b. loss of confidence in the register as a reliable record of charities and their objects

c. loss of transparency and accountability of the sector and of the Commission’s effectiveness as its regulator.

d. poor service to the public

e. inability of the public to access operational and information services required leading to customer dissatisfaction.

a. robust planning arrangements in place to identify, to secure and effectively utilise systems resource

b. development and regular testing of disaster recovery plan and business continuity plan.

c. maintenance of adequate security controls and standards.

d. requirements for submission of annual returns and register check forms, with enforcement action where these not received.

e. monitoring of information and checks made eg on high risk activities, changes to charity trustees etc f.

f. independent quality control checks on the accuracy of the charity register and database

g. regular examining of the register, on either a thematic or sample basis to cleanse incorrect data and/or take appropriate action in respect of inactive charities

h. planning and control arrangements in place to ensure accuracy and quality of material published on the Commission’s Website

a. failure to protect charitable assets and beneficiaries most at risk.

b. failure to tackle most urgent and important issues affecting the sector.

c. imbalance of effort between functions carried out by the Commission according to their risk profile.

d. loss of public confidence in the Commission’s ability to supervise sector appropriately

e. inability to develop and improve services

f. targets and objectives not met.

g. insufficient numbers of staff with the right skills and experience available to enable the Commission to properly discharge its statutory duties.

h. Poor industrial relations which may lead to industrial action..

i. non-compliance with legislation i.e. health & safety

a. regular (at least annual) assessment of the risks to the achievement of Commission strategic objectives and allocation of resources accordingly.

b. development of risk indices, performance indicators and trend analysis to inform the allocation of resources.

c. effective review of resource allocation during annual business planning round.

d. operational management monitoring of resource allocation against in-year performance

e. targets set for operational areas and progress monitored against them

f. robust business planning systems in place to identify and make case for financial, people and other resources required.

g. HR systems for recruitment and selection, appraisal, training and development etc.

h. Whitley council meetings and other arrangements to foster good relations between management and the Departmental Trade Union Side

i. internal control systems, policies and procedures i.e. health & safety, recruitment, etc

j. robust budget monitoring and forecasting arrangements