Risk Management in the NZDF

Risk management is at the core of good management. It is about identifying what could stop the NZDF achieving its objectives and acting to reduce the likelihood of the event(s) as well as mitigating the impact if the event(s) does occur.

Purpose

The purpose of risk management in the NZDF is to contribute to the achievement of several entity wide objectives:

• Alignment of strategic intent and related objectives.
• Good, informed strategic and operational decision-making.
• Efficient and effective operations.
• Reliable financial and non financial reporting.
• Compliance with internal procedures and external laws and regulations.
• Safeguarding of assets.

Integrated Risk management

Risk management is at the hub of the NZDF’s corporate governance framework. The NZDF Risk Management Framework (RMF) is being enhanced to integrate seamlessly with the other corporate management systems, such as strategic planning and the Defence Performance Management System (DPMS).

Policy

The NZDF’s risk management policy and risk management principles are detailed in Defence Force Order (DFO) 81, Risk Management. The Risk Management Policy is supported by a set of Risk Management Principles to govern what is acceptable and expected of all NZDF personnel with regards to risk management.

Current Situation

The last twelve months has seen an enhancement in the NZDF’s risk management culture and understanding. This has been achieved through a number of initiatives, such as the development of the NZDF Strategic Plan, enhanced corporate reporting systems, Executive Leadership Team articulation of risk appetite, and the implementation of an in-house risk management training course for middle level commanders and managers. The NZDF intends to conduct a further risk management gap analysis in 2007 to determine how far the organisation has progressed in its roll out of its risk management policies, principles and culture.

Risks to NZDF Strategic Objectives

The NZDF is exposed to a wide range of risks to the successful achievement of its objectives. These risks arise within and external to the organisation. Some of the more significant risks to the NZDF, over the next few years, within each of the NZDF’s Strategic Perspectives are as follows:

• Strategic Perspective: Our Stakeholders
  • The NZDF may be unable to raise a Force Element to the Operational Level of Capability (OLOC) due to the ongoing high operational tempo - leading to an inability of the NZDF to effectively meet a request from the Government for further operational activity.
  • Purchased outputs may not be fully provided to the Government as a result of insufficient appropriate human and physical resources - leading to the inability of the NZDF to contribute effectively to wider Government initiatives.
• Strategic Perspective - Enabling Processes
  • NZDF information systems may not get the right information to the right people in a timely and efficient manner. The systems may act as an impediment to information access, and a disincentive to collaboration.
• Strategic Perspective - Learning and Growth
  • Development of the NZDF’s military capability may be slower than planned as a result of a lack of flexibility in exploiting the potential of new technologies.
  • Predicted demographic changes may impact on the quantity and quality of the NZDF’s traditional recruit pool.
• Strategic Perspective: Resources
  • Ongoing operational requirements may remain significantly higher than the base level upon which capability was to be built resulting in capability development not proceeding in accordance with capability plans.
  • Capability development may not proceed in accordance with capability plans due to an unexpected increase in the rate of military inflation and/or exchange rates.

Risk Mitigation

Known risks to the strategic and operational objectives are mitigated by the existing control environment. Where controls are ineffective, or do not exist (for example in relation to emerging risks), appropriate treatment activity is either in progress or is under development.

NZDF Sustainable Business Practice

The NZDF has recently approved a draft policy approach to improve environmentally sustainable business practice within the NZDF. This plan recognises Government policy and the commitment made by the NZDF to the Govt³ programme. The Govt³ programme has four focus areas: Sustainable Buildings, Vehicles and Travel, Office Consumables and Equipment and Waste Recycling and Minimisation. The NZDF will now develop priorities within these four focus areas.

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