RISK MANAGEMENT

Working in conflict-affected areas to achieve War Child’s objectives requires proper risk management. We strive to mitigate risks that pose a threat to reaching our objectives. War Child has a ‘bottom-up’ risk management approach, in which the periodic risk assessment of country management teams feeds into the organisation’s consolidated risk matrix. In our country offices, risk workshops are also held that focus on awareness and culture. A zero-tolerance campaign for fraud was rolled out across the organisation.

In 2017 War Child will recruit a Risk Manager / Anti-Fraud Lead to coordinate risk management and signal risk events. We will continue to use a consolidated approach to risk management throughout the entire organisation.

In 2016 formal and informal processes were mapped using a bottom-up approach, involving key staff members from head office and our country offices. Subsequently, all types of risks and mitigation measures - either in place or under consideration - were assessed. War Child’s primary risks are outlined below, categorised into strategic, operational, legal and governmental, and financial risks. The main risks that fall under each category are described, as well as mitigation measures, to give an indication of management choices in controlling risks and uncertainties. The below is only an extract of our full risk matrix, in which a wider range of risks are identified, rated and (where possible) mitigated.

I. Strategic risks

Partnerships

Building partnerships in a fragile, rapidly changing context is challenging. Risks include a poorly defined shared vision and objectives, instances where partners do not meet performance targets and situations where collaborative advantages are unclear.

Strategic decisions

The introduction of new directions could lead to a loss of focus and impact on the ability to complete existing plans. In order to avoid this, position papers will be drafted to ensure informed decisions are taken and realistic timeframes are in place for the development of quality interventions.

Reputational risks

War Child’s reputation is one of our most valuable assets - and although we can influence it, we cannot completely control public perception of our organisation. We can, and do, however, actively engage in and monitor public debate through an open and transparent communication policy. This is particularly important in the current climate where there is increasing scepticism directed towards charities.

II. Operational risks

Compliance

Having policies and procedures in place is not an absolute guarantee that compliance will occur. In a remote management or emergency intervention, following regular procedures is not always possible. This leads to exposure to risks that are normally mitigated. In response to this risk War Child develops compliance-proof operating procedures tailor-made for these circumstances.

Another challenging operational element with regard to compliance is the management of implementing partners. Risks that are required to be managed include poor quality implementation, discontinued operations and partner fraud. War Child focuses on clear policies and tools that fit operational processes, and places emphasis on supporting cultural change and monitoring adherence via an internal control framework.

IT support and data security risks

Every organisation faces challenges with regard to IT, particularly when working in fragile contexts. In 2016 we continued to improve IT support and controls and the internal organisation was evaluated to get a clear picture of our exposure to IT security risks. The most important action point for 2017 will be the selection of a new ERP system, extra training for all staff, raising awareness with regard to IT threats and putting procedures in place to safely deal with information and the use of IT systems.

Availability of qualified staff

Every NGO is aware that attracting and retaining quality team members is a challenge in insecure environments. Turnover in staff is costly, puts pressure on teams and can lead both to a loss of valuable knowledge and inefficient operations. A thorough recruitment process with a focus on field-driven and socially interactive humanitarian staff, investments in training and development of staff at all levels, and a focus on organisational learning are key mitigating elements.

III. Legal and Governmental

Security

War Child works in countries and regions affected by conflict. The resulting threats to the safety of our staff and beneficiaries require continuous monitoring of the security situation and adaptation to changes in the context, sometimes at short notice.

Child safeguarding

War Child is a member of Keeping Children Safe (KCS), a global network of organisations striving to ensure children are safeguarded and protected from all forms of abuse. The child safeguarding policy of War Child is designed to protect children in contact with the organisation and its partners.

IV. Financial risks

Financial and investment loss

During its normal operations, War Child is exposed to currency, cash flow, credit and liquidity risks. To control these risks, War Child has instituted policies and procedures that are intended to limit the risks of unpredictable adverse financial developments. War Child does not trade in financial derivatives, nor does it invest any of its income in the stock market or other risk-bearing assets, believing that it is inappropriate to speculate with donations meant for its mission.

Income

There is a risk that War Child fails to reach its fundraising targets. This could have an impact on the continuation of our programmes. War Child mitigates this risk through diversification of donors. Generating income from multiple, diverse sources reduces the risk of a sudden decrease in income. It also ensures the availability of flexible income in addition to earmarked income. War Child seeks a prudent balance in earmarked and non-earmarked income. Earmarked funds have to be spent in a specific country or project, but the availability of sufficient non-earmarked funds allows War Child to adapt quickly to changes in circumstance.

In accordance with the Dutch Accounting Guidelines for fundraising institutions (RJ650), War Child holds a continuity reserve as a buffer. War Child’s continuity reserve complies with VFI (the Netherlands Association of Fundraising Organisations) regulations and is reviewed and approved annually by the Supervisory Board. The reserve is adequate to ensure continuity for three years even if sources of income are lost or unforeseen expenses must be covered.

Ineligible costs

Ineligible costs may arise when the organisation fails to follow procedures required by large donors or when there are difficulties with implementation according to a grant agreement. This may lead to financial setbacks and can impair our relationship with the donor in question. To avoid the occurrence of such events, War Child focuses on training, support and communication of guidelines, and also performs internal and external audits.

Fraud

Despite War Child’s policies and measures to ensure the best use of its funds, the threat of a breach in integrity standards can only be minimised and not ever fully abandoned. Fraud and corruption have financial implications as well as implications for War Child’s reputation and credibility. War Child is continuously updating and strengthening its anti-fraud measures. War Child reduces the risk of such incidents by monitoring compliance to existing anti-fraud measures such as the segregation of duties, the authorisation matrix and procurement requirements through internal and external audits.

The organisation also conducts thorough background checks for all new employees before they are hired. And, last but not least, staff, implementing partners and suppliers are continuously made aware of our Integrity Policy and whistleblowing procedures. This is done through co-signing our Integrity Policy, organising discussions about relevant themes and sharing alerts about incidents of fraud to raise awareness.