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Managing risk

Funders must balance trust in service providers against ensuring that public money is used effectively. Funders need ways to manage risk and monitor expected outcomes.

Identifying and assessing risk

Risk may arise from contract or funding processes as much as from a particular contract or relationship. Managing risk is a part of managing contracts.

Funding agreements will usually involve some implicit risk-sharing. Treasury contracting guidelines include advice on how to identify and manage risks.

Good decision-making

Government agencies need to make good decisions about who and what to fund. The Auditor-General advises agencies to determine the purpose of a funding arrangement, decide if they are getting value for money and assess potential risks.

Good practice reporting

An agreed reporting plan will reduce risks associated with funding Non Government Organisations and help to ensure the delivery of the contracted service. This section includes some of the key elements government agencies need to include in their reporting requirements when they monitor the performance of Non Government Organisation.

The advice draws on a recent series of reports prepared by the Auditor-General.

Balancing risk - New Zealand Agency for International Development (NZAID) Case Study

The New Zealand Agency for International Development (NZAID) works in a high-risk area, funding overseas partners in situations that can quickly change. It has developed a funding policy for working with New Zealand Non Government Organisation s that minimises risk, while at the same time encouraging and supporting innovation.

Guidelines for risk management - An example from the Ministry of Social Development

The Ministry of Social Development's Risk Management Guidelines helps staff to better manage and minimise the risks associated with their work.

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