This assessment is based on my interest area, in which I will be discussing the risk management first as a concept and then I will apply to the NHS Foundation Trust. As this was my main area I had concentrated on for our group presentation. Generally, Risk Management is the process of measuring, or assessing risk and then developing strategies to manage the risk. In general, the strategies employed include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.
The objective of this topic, which has been developed with reference to the NHS Foundation Trust, is to provide detailed guidance on the preparation of reports using the selected monitors. This particular topic is divided into three main chapters. Chapter one provides and overview of how risks are managed and what are the risks. Chapter two explains the types of corporate risks which evolved during my research reflection on this subject. And chapter three provides a concise overview of what do risks affect.
The concepts of how risks are managed are basically, once risks have been identified, they must then be assessed as to their potential severity of loss and to the probability of occurrence. These quantities can be either simple to measure, in the case of the value of a lost building, or impossible to know for sure in the case of the probability of an unlikely event occurring. Therefore, in the assessment process it is critical to make the best educated guesses possible in order to properly prioritize the implementation of the risk management plan.
The fundamental difficulty in risk assessment is determining the rate of occurrence since statistical information is not available on all kinds of past incidents. Furthermore, evaluating the severity of the consequences (impact) is often quite difficult for immaterial assets. At this group session we had, they noted on how risks were managed within the NHS Foundation Trust and how we had provided a broader context in which the issue of corporate responsibility could be addressed.
In particular it was agreed that such information could also reflect corporate contribution to the economic and social development of NHS Foundation Trust, as well as the need for capacity building. Further group sessions were held on organisational risk and responsibility was again highlighted, where it was agreed that this work should continue to reflect corporate contributions to the way the risks were managed within the NHS Foundation Trust.
A third key dimension of group discussion work on the financial risk arose during deliberations, where it was emphasised that according to the NHS Foundation Trust authorised as at 30th September 2010 that the current risk ratings for the 130 NHS foundation and it published two risk ratings for each NHS foundation trust: * financial risk rating (rated 1-5, where 1 represents the highest risk and 5 the lowest); and * Governance risk rating (rated red, amber-red, amber-green or green). Financial risk ratings are allocated using a scorecard which compares key financial information across all foundation trusts.
A rating of 5 reflects the lowest level of financial risk and a rating of 1 the greatest. But, when assessing financial risk, Monitor will assign quarterly and annual risk ratings using a system which looks at four criteria: 1. Achievement of plan; 2. Underlying performance; 3. Financial efficiency; and 4. Liquidity. The risk rating is forward-looking and is intended to reflect the probability of an actual or potential financial breach of the foundation trust's terms of authorisation.
On the other hand, the term governance describes the effectiveness of an NHS foundation trust's leadership. In our group sessions, we used came across that the Monitor uses a graduated system in colours. For example, Green are the lowest risk, Amber-green, Amber-red and Red are the highest risk. These are to measures as to whether foundation trusts are meeting national targets and standards. The NHS foundation trust considers these areas when assessing the governance risk ratings which they publish for each trust.
Firstly, we reported on the legal documents that describe how each is governed, whilst focussing on growing a representative membership that are accountable to their local communities and must have plans in place to develop and grow a representative membership with significant year-to-year changes with explanations. Also, they should contain appropriate board roles and structures for the Monitor to check whether the suitable roles exist and are filled within each NHS foundation trust.
However, they also look for evidence that a collaborative but there is a challenge between the board of governors and the board of directors, and the executive and non-executive members of the board of directors. Nevertheless, when it comes to corporation with NHS bodies and local authorities, as part of their terms of authorisation, the NHS foundation trust have to cooperate with a range of NHS bodies and with local authorities. Also, to certify Monitors, a board must be satisfied, that their NHS foundation trust has effective measures and arrangements in place to monitor and continually improve the quality of healthcare it provides.
However, it is under the boards to confirm that plans are in place to ensure that targets and standards will be met continually as well as taking in hand and resolving any risks that have been recognised. But if issues are outstanding, the board must demonstrate to Monitor that plans are in place to address them and boards have to confirm that they expect to be able to continue to provide mandatory services. The only way the NHS foundation trusts will be allocated to risk ratings is when they have been authorised for a full quarter. Nevertheless, NHS Foundation Trusts submit three types of annual reports to the regulator.
Such as, the information on Regular reports is submitted every three months, exception reports are submitted when there is a compliance failure and Ad hoc reports are submitted upon regulators request. Within the NHS Foundation Trust, reputational risk is a type of risk related to the trustworthiness of business. If the monitor damages to a firm's reputation then this can result in lost revenue or destruction of shareholder value, even if they are not found guilty of a crime. Reputational risk can be a matter of corporate trust, but serves also as a tool in crisis prevention.