(A pdf copy of this document is available for download here)
Date: May 2025
Prepared by: J Stuart, Town Clerk
Reviewed by: Council
Review Frequency: Annual or upon material change in circumstances
1. Risk Assessment Table
| Risk Area | Risk Description | Likelihood | Impact | Risk Score | Controls/Mitigation | Residual Risk |
|---|---|---|---|---|---|---|
| Budgetary Control | Budget overspend due to poor forecasting or unexpected costs | Medium | High | Medium-High | Monthly budget monitoring; approval process for spend; reserves policy | Low |
| Precept Setting | Inadequate precept resulting in underfunding | Low | High | Medium | Based on robust budget planning; public consultation; reserve analysis | Low |
| Cash Flow | Insufficient funds to meet short-term obligations | Low | High | Medium | Regular cash flow forecasts; minimum reserve balance | Low |
| Fraud & Misappropriation | Theft or misappropriation of council funds | Low | High | Medium | Segregation of duties; internal audit; bank reconciliation; Fidelity Guarantee insurance | Low |
| Grant Income Reliance | Loss of grant income | Medium | Medium | Medium | Diversified funding sources; prudent use of grants; not used to fund ongoing costs | Low-Medium |
| Procurement & Value for Money | Failure to achieve best value in purchasing or contracts | Medium | Medium | Medium | Standing Orders and Financial Regs; tendering process; quotes for purchases | Low |
| Reserves Management | Inadequate reserves to cover emergencies or unforeseen costs | Low | High | Medium | General reserves policy | Low |
| Compliance with Financial Regulations | Breach of financial or audit regulations | Low | High | Medium | Regular training; internal controls; independent internal audit | Low |
| Payroll & Staffing Costs | Overruns, errors, or non-compliance with HMRC or pension contributions | Medium | Medium | Medium | Outsourced payroll or reviewed internally; contracts in place; HR/payroll software | Low |
| Capital Projects Overspend | Major project exceeds budget or is delayed | Medium | High | High | Project plan, risk register, contingency fund, committee oversight | Medium |
| Insurance Adequacy | Insurance does not cover relevant risks or has lapsed | Low | High | Medium | Annual review of cover; specialist advice if needed | Low |
2. Risk Scoring Matrix
Likelihood Impact Risk Score
| Likelihood | Impact | Risk Score |
|---|---|---|
| Low | Low | Low |
| Low | High | Medium |
| Medium | Medium | Medium |
| Medium | High | Medium-High |
| High | High | High |
3. Key Controls in Place
- Financial Regulations & Standing Orders – Regularly reviewed and updated in line with latest guidance.
- Internal & External Audit – Independent internal audit plus external audit as required under the Local Audit and Accountability Act 2014.
- Budget Monitoring – Regular reports to council or finance committee; variance analysis.
- Asset Register & Insurance – Maintained and reviewed annually.
- Reserves Policy – In place and reviewed annually with the budget.
- Fidelity Guarantee Insurance – Covers staff and councillors handling finances.
- Training – For councillors and staff on financial responsibilities.
4. Emerging Or Future Risks
| Risk Description | Potential Impact | Monitoring Approach |
|---|---|---|
| Inflationary pressure on service costs | Increased cost of delivery | Monitor economic indicators and adjust budget planning |
| Changes to Government Funding Formula or Audit Regs | Uncertainty in funding or burden | Liaison with NALC/SLCC; policy watch |
| Cybersecurity & IT systems | Data breach or service disruption | IT provider controls; cyber insurance |
5. Review & Sign-Off
Reviewed By
Date Reviewed
Notes / Actions Required
Clerk / RFO [Insert Date]