Working Effectively in Conflict-affected and Fragile Situations: Briefing Paper H: Risk Management

This 12-page briefing paper from the United Kingdom (UK) Department for International Development (DFID) examines risks that threaten DFID's ability to operate and implement policies and programmes in situations of conflict and fragility, and offers a range of practical examples demonstrating how they can be managed.

After outlining the importance of risk management in conflict-affected and fragile situations, the paper looks at:

• Types of risk - including country risks, partner risks, programme/project risks, reputational risks, political risks, security risks, and fiduciary risks. One text box in this section details the MENAD Programme Risk Assessment Matrix (PRAM), which includes the following elements: a summary of portfolio performance and trends, and the numbers and percentage of programmes judged high-risk across the portfolio; one-page risk summaries for each country and the region; a table showing monthly performance scores for all live programmes; and detailed individual risk reports for all programmes scoring 3-5 (on a 1-5 risk scale). PRAM has benefits including cross-programme learning, but - per DFID - a key challenge is how to keep risk reporting light enough to be manageable, but still treated with the seriousness it requires.
• Approaches to risk assessment and management - including: the 4Ts (4 basic responses to risk: tolerate, transfer, terminate or treat); managing risk by diversifying; and managing risk by scenario and contingency planning. A case study of the latter approach illustrates the communication tie-in: In 2006, DFID Bangladesh worked with consultants to develop scenarios running to 2020 with a list of 20 "drivers" and "polarities". The most important and uncertain drivers were then clustered into 2 groups, revealing 2 key uncertainties: social, cultural, and political attitudes and values (including drivers such as access to media and information technology and the regional economic and political environment); and the nature of social and economic development (including drivers such as changes in the rural economy, increasing inequality, and urbanisation). A workshop was held to identify actions to manage the risks inherent in each scenario, along with actions to support the emergence of positive scenarios. The resulting outputs were fed into the country planning process. DFID Bangladesh has since built on this work by undertaking a horizon scanning exercise and holding a series of stakeholder focus group discussions.
• Risk monitoring - Effective risk management is a dynamic process, DFID stresses; risks must be monitored over time and mitigating actions regularly reviewed. "Good risk management requires resources - particularly staff time. Based on sound analysis, it should be a senior programmatic responsibility rather than a technical administrative task....Effective risk management requires sharing information from a broad cross-section of sources." One example of how this looks in practice comes from the joint risk management office (RMO) set up by DFID Nepal and Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) in 2002. The RMO's role involves: establishing and supporting systems and procedures for security risk management in DFID and GTZ; providing training for staff and partners; offering advice on security issues to staff, partners, and consultants, and operational advice to programmes/partners on managing field security risks; and providing regular field-based analysis to the heads of DFID and GTZ. A key risk to staff security identified by the RMO was the perception of poor standards in aid and the behaviour of some development personnel. At the same time, the behaviour of both insurgents and the security forces threatened the viability of development activities. In response, the RMO developed Basic Operating Guidelines (BOGs), to set out the case for development and set standards for all parties to uphold.

Key lessons learned are offered at the close of the paper. For instance, DFID emphasises that analysis of context is the foundation of risk assessment and management. Risk assessment and analysis must be owned at senior levels within an office, but must also draw on knowledge and perceptions at junior levels. DFID offices should avoid becoming so accustomed to risk that they begin to discount its seriousness or fail to register deteriorating situations.