Annex 9: SSHF Risk Management Framework

Transcription

1 Annex 9: SSHF Risk Management Framework SOUTH SUDAN HUMANITARIAN FUND (SSHF) RISK MANAGEMENT FRAMEWORK THIS UPDATE, JULY 2017

2 1. Introduction 1.1 Risk management is an essential component of accountability for Country Based Pooled Funds (CBPFs), as emphasised in OCHA s global guidelines and the accompanying policy instruction. A Risk Management Framework (RMF) ensures that priority risks are mitigated at the Fund level, but also at the global level, where OCHA s corporate risk registry identifies pooled fund management as a key risk to the organisation. 1.2 Although important elements of risk management were previously practiced, a formal RMF for the South Sudan Humanitarian Fund (SSHF) (then known as the South Sudan Common Humanitarian Fund, CHF) was introduced for the first time in , followed by a light update during the final quarter of This update of the RMF, as of June 2017, considers developments in the external context within which the SSHF operates, and in internal risk management practices. The document concludes with a work plan for the remainder of 2017, taking into account progress and achievements against the previous work plan and an updated assessment of areas where further work is needed to mitigate residual risks. 2. Methodology 2.1 Risk is understood as the effect of uncertainty on objectives. For the SSHF this means the effect of uncertainty on achieving its strategic objectives and intent. An effect may be positive, negative or a deviation from the expected. Risks are often described as events or changes in circumstances, or the consequences of those. 2.2 The SSHF RMF adopts the different components of a risk management process, as illustrated in the graphic. 2.3 The following sections of this document refer to the different steps of the analytical process: the context is outlined (section 3); risks are identified and analysed (section 4); risks are evaluated. Treatment measures are proposed and incorporated into a work plan for the coming period (section 5); parameters for further periodic review and refinement of the Risk Management Framework are set out (section 6). 1 South Sudan Common Humanitarian Fund Risk Management Framework (February 2015) 2 South Sudan Humanitarian Fund Risk Management Framework, as Annex 9 to the South Sudan Operational Manual (December 2016) Page 2 of 16

3 3. The Context (a) Operating environment 3.1 In 2017 the humanitarian crisis in South Sudan continues to worsen. Despite the formation of the Transitional Government of National Unity (TGoNU) in 2016, violence continues in multiple locations while the economic situation deteriorates, intensifying humanitarian needs including in locations previously considered as relatively stable. By mid-2017, some 4 million people have been forced to flee their homes since the conflict began in late 2013, including around 2 million internally displaced and another 2 million as refugees in neighbouring countries. 3.2 Hunger and malnutrition have reached historic levels. Localised famine was declared in parts of Unity in February The Integrated Food Security Phase Classification (IPC) update in June 2017 indicates that an estimated 6 million people half of the population are facing severe food insecurity. June 2017 marks the one-year anniversary of the declaration of cholera now the longest, most widespread and deadliest outbreak since South Sudan s independence with over 11,000 cases reported in 24 counties. In general, health conditions and nutritional status continue to decline. Violations against civilians, including killing, sexual and gender-based violence and recruitment of children by armed actors, continue to be widely reported. 3.3 Children face mounting risks. A child born in the year of South Sudan s independence (2011) will have spent half of their life with their country in conflict. Nearly one in every three schools in South Sudan has been destroyed, damaged, occupied or closed, impacting on the education of more than 900,000 children, including some 400,000 who have been forced out of school by the conflict. Over 16,000 children are estimated to be recruited by armed forces in South Sudan. Over 10,000 children have been registered as unaccompanied, separated or missing. Anecdotal evidence indicates that child marriage is increasing due to conflict and economic pressures. An estimated one million children are believed to be in psychosocial distress. 3.4 South Sudan s economic crisis has escalated. The South Sudanese Pound (SSP) has rapidly depreciated, while the cost of living rises exponentially. The South Sudan annual Consumer Price Index increased by around 800% between the end of 2015 and the end of 2016, the highest annual inflation rate in the world. While the rate has fallen somewhat in 2017, the poor are increasingly destitute. 3.5 Refugees from neighbouring countries continue to seek refuge in South Sudan. Fighting in Sudan s South Kordofan and Blue Nile states is the cause of continuing refugee arrivals in Unity and Upper Nile, creating tensions and in some cases clashes with host communities. As of May 2017 South Sudan was hosting some 227,925 refugees from Sudan, the Democratic Republic of the Congo (DRC), Ethiopia and the Central African Republic (CAR). 3.6 Humanitarians face an increasingly difficult and dangerous operating environment. Following the outbreak of conflict in Juba in July 2016 humanitarian access challenges have proliferated. Between January and April 2017 more than 300 access incidents were reported. The total of aid workers killed since the onset of the crisis at the end of 2013 has risen to 82. Humanitarian supplies and equipment are exposed to damage, looting and diversion. 3.7 Despite such challenges, humanitarian partners reached over 5.1 million people in 2016, including more than 4 million people receiving food assistance; 2.5 million access to clean water; 2.3 million people emergency livelihoods support; 954,700 people non-food items; 700,000 children and pregnant and lactating women treatment for acute malnutrition; 637,000 children vaccinations against communicable diseases; and half a million children access to education. The 2016 Humanitarian Response Plan was 92 per cent funded. As of June, the 2017 HRP stands at around 50 per cent funded, with more than U$800 million secured. Page 3 of 16

4 (b) Objectives of the SSHF 3.8 The Operational Manual for the SSHF sets out the objectives of the Fund as: i. Enhance the effectiveness of the coordinated humanitarian response by channelling funds to most critical life-saving and life-sustaining priorities within the HRP; and provide resources to respond to unforeseen events or unplanned requirements; ii. Strengthen humanitarian coordination and leadership, notably through the functions of the HC and the cluster system; iii. Promote humanitarian action in line with principles of humanity, neutrality, impartiality and independence; and iv. Expand delivery of assistance in hard-to-reach areas by partnering with national and international NGOs. 3.9 The SSHF aims to provide both predictability (support to identified and prioritised needs as articulated in Humanitarian Response Plans) and flexibility (support to rapid onset or other types of unforeseen and unplanned needs). It offers the opportunity for the pooling of resources so that their harmonised use, as determined through collective prioritisation and analysis by the humanitarian coordination system and under the leadership of the HC, can produce greater overall effect than would be obtained from multiple, parallel and potentially fragmented bilateral funding streams. The processes associated with the pooling of resources and their coordinated utilisation help to strengthen humanitarian leadership and coordination arrangements per se. (c) SSHF achievements and areas for consolidation 3.10 Since inception in 2012 the Fund has mobilised and allocated a relatively high volume of funds over US$500 million making it the largest CBPF globally over the last five years. Evaluations and audits have, in general, considered allocation processes as robust during 2016 these were further streamlined and shortened, while at the same time steps to promote inter-cluster synergies and integrated programming were introduced Donor contributions have declined, however, from a peak in 2014 following the onset of the current crisis, both in absolute terms and as a proportion of all funding secured for the Humanitarian Response Plan (HRP) 3. While the Fund remains amongst the top four funding sources to the HRP, turnover is significantly below the target of 15 per cent of total HRP requirements as endorsed during the 2016 World Humanitarian Summit. Further, the timing of donor contributions is erratic, compromising the ability to plan and the degree of predictability of allocation cycles Engagement with national NGOs has progressively increased. Some 12 per cent of SSHF funding in 2016 (up from 11 per cent in 2015 and 8 per cent in 2014) was allocated to 24 national NGOs (up from 22 in 2015 and 16 in 2014). National NGO representation in the Advisory Board was formalised in Over a number of years support and advice has been provided to national NGOs during capacity assessments, monitoring, financial spot checks, audits and trainings, to assist them in engaging with Fund processes and accessing funding Finalisation of the SSHF Operational Manual at the end of 2016, and its ongoing promotion during 2017 continues to improve knowledge amongst stakeholders about objectives, policies and workflows related to the Fund. The Operational Manual brings together in one place a number of guidance documents developed during previous years, while incorporating updated terminology and introducing some changes in practices that are required to conform with OCHA s Global Handbook for Country Based Pooled Funds issued in From 2015 the Fund has progressively introduced OCHA s global on-line project management tool the Grant Management System (GMS) significantly enhancing data management related to the project portfolio. This has enabled improved data analysis that can inform the overall strategic 3 Contributions to the Fund since inception have supported the following annual allocations: 2012 US$98m; 2013 US$107m; 2014 $139m; 2015 US$96m; 2016 US$81m. Total contributions to the coordinated response plans during the same period are as follows: 2012 US$787m; 2013 US$771m; 2014 $1,592m; 2015 US$1,079m; 2016 US$1,192m. Sources: MPTF Gateway; OCHA FTS. Page 4 of 16

5 direction and management of the Fund, including funding decisions. The SSHF is seen as demonstrating advanced use of the GMS, and the modular system offers the prospect of the introduction of additional elements to further streamline and enhance project and Fund management. In particular, roll out of GMS modules for the oversight of due diligence requirements, capacity assessments, performance assessment and audits is planned for Recent Fund-level evaluations and audits 4 have tended to focus on two main areas for consolidation. Firstly, there has been a need to enhance monitoring and reporting systems to increase the scope and quality of independent verification of the status and achievements of the funded project portfolio. This was emphasised in previous versions of the RMF. Significant changes were introduced during 2016, with the team of Monitoring and Reporting Specialists downsized and relocated to OCHA from having worked under the auspices of the Cluster Lead Agencies. The arrangement offers greater cost effectiveness, reducing costs while the coverage of monitoring activities has increased to over 30 per cent of the project portfolio. Along with improved usage of the GMS to analyse and aggregate data from reports submitted by partners, the Technical Secretariat is increasingly well placed to provide periodic analysis of achievements and trends across the project portfolio, including to the Advisory Board and clusters. Secondly, the Fund is one of a limited number with a joint Technical Secretariat comprising OCHA and UNDP, with UNDP assuming the role of Managing Agent for NGO projects. There has been a need to further clarify roles and responsibilities and better integrate processes and information flows. This was also emphasised in previous iterations of the RMF. During 2016, the preparation of the SSHF Operational Manual provided the opportunity to further clarify roles, policies and processes. In addition, UNDP s global Guidelines for Engagement with NGOs under Country Based Pooled Funds were issued as a complement to OCHA s global guidelines. Nonetheless, the roll out of some of the changes envisaged in the Operational Manual remains complex, since UNDP s corporate frameworks are not completely compatible with the Global Handbook. These differences remain a matter of discussion at Headquarters level. A country visit by a UNDP Adviser in May 2017 provided an opportunity to further clarify issues of concern including the contractual instrument used by UNDP and its implications for disbursement and reporting regimes; capacity assessment; audits; asset management, and reporting in relation to misappropriation and losses and to discuss potential ways forward. 4 Evaluation of the Common Humanitarian Fund, Country Report: South Sudan, The KonTerra Group, May 2015; Audit of the Office for the Coordination of Humanitarian Affairs Operations in South Sudan, OIOS, April Joint audit of the governance arrangements of the South Sudan Common Humanitarian Fund, OIOS, December Page 5 of 16

6 4. Risk Identification and Analysis 4.1 During the development of the RMF for the first time in 2015, some 17 risk areas grouped under six categories were identified and analysed. Those risks are described at Annex 1. The parameters for analysis of each risk and the designation of a risk level (i.e. an assessment of the relative likelihood of the risk materialising, and the relative severity of potential consequences) are shown at Annex 2. A risk mitigation work plan was developed and follow up actions implemented into During the 2016 update of the RMF risks were re-analysed and changes in risks levels assessed. Changes in risk levels may result from changes in the operating context and / or progress made with risk mitigation measures. Five risks assessed as having the highest residual risk levels were prioritised for further attention. These concerned monitoring and reporting; fraud management; oversight of project portfolio data; adherence to policies and procedures; and insecurity / access impediments affecting project implementation. An updated risk mitigation work plan was developed accordingly. Annex 3 shows the status of progress, through to mid-2017 at the time of this update of the RMF. 4.3 The heat map below illustrates the updated, residual risk levels for each identified risk, based on a review of the operating context and progress with implementation of previously devised risk mitigation measures. 4.4 Of note are the following: in light of actual trends, risks concerning the declining volume of donor contributions (risk 2), and the timing of donor contributions in relation to seasonal programming requirements (risk 17), are assessed as having increased; in light of the current operating context, notable for the geographical spread of conflict and an increase in bureaucratic impediments to humanitarian action; - the risk concerning the complementary use of funding with other funding streams (risk 14) is assessed as having increased; - the risk of misappropriation (risk 8) is broadened to encompass not just potential fraud, but also the potential for losses of supplies and equipment through looting or confiscation; - the risk concerning humanitarian access (risk 16) is assessed as having increased. a number of risks are assessed as having reduced as compared to the previous assessment due to improved mitigation measures. These include ongoing improvements in the monitoring and reporting function (risk 3); continuous enhancements in the use of the GMS and the capability to manage and analyse data across the project portfolio (risks 4, 10, 12); and the consolidation of policies, roles and responsibilities and expected practices in the SSHF Operational Manual (risks 5, 11). the risks level assessed for all other risks remains unchanged from the previous assessment. While the risk of misappropriation (risk 8) continues to be the same as previously assessed, it remains one of the highest risks, and as noted above is expanded in its scope to cover fraud and other types of losses that may arise including due to damage, looting and confiscation. Page 6 of 16

7 Likelihood Risk 14: Coordination with donors Risk 16: Access Risk 5: Adherence to policies and decisions Risk 6: Communications Risk 9: Absorption Risk 13: Coordination with clusters Risk 17: Seasonality Risk 2: Resource Acquisition Risk 8: Misappropriation / losses 10 Risk 1: Coherence Risk 7: Advisory Board Risk 10: Financial reporting Risk 11: Work flows Risk 15: Coordination with partners Risk 4: Evidence based governance, data management Risk 12: Data management Risk 3: Monitoring and reporting Consequence 4.5 The following table sets out for each risk the risk levels assigned in 2015 and 2016, as well as the level of residual risk as reassessed for this update of the RMF and shown in the heat map above, allowing for an appreciation of the trend in the assessed risk levels (decrease, no change, increase). Page 7 of 16

8 # Identified risk Risk category: strategic and programmatic Coherence (insufficient coherence between humanitarian needs and allocation 1 decisions) Resource acquisition (insufficient funds available at critical times to ensure needs 2 addressed) Monitoring and reporting (systems insufficiently robust to give adequate information to 3 stakeholders) Risk category: governance and management Evidence based governance (inadequate dominion over portfolio performance and data 4 weakens decision making) Adherence to policies and decisions (insufficient understanding and oversight weakens 5 adherence and dilutes overall impact) Communications (incomplete communications negatively affects perception, credibility 6 and support) Advisory Board (insufficient engagement reduces confidence and weakens quality and 7 rigour of processes) Risk category: financial Misappropriation / losses (insufficient fraud mitigation and detection measures and 8 mitigation measures to minimise losses from looting and diversion) Absorption (insufficient delivery capacity in funded partners leads to slow and / or 9 ineffective resource utilisation) 10 Financial reporting (inadequate reporting constrains effective decision making) Risk category: internal 2015 rating 2016 rating 2017 rating Likelihood Consequence Level Likelihood Consequence Level Likelihood Consequence Level Work flows (sub-optimal work flows in the Technical Secretariat create inefficiencies) Data management (insufficient dominium over portfolio data weakens efficient day to day Fund management) Risk category: coordination and partnerships 13 Coordination with clusters (weaknesses in collaborative processes affect rigour of allocations and M&R during implementation) 14 Coordination with donors (limited coordination with other funding streams limits complementarity and overall impact) 15 Coordination with partners (limited capacity of some partners to engage with processes constrains overall impact) Risk category: hazards Access (insecurity, access impediments constrain project delivery by partners) Seasonality (Fund cycle insufficiently aligned to seasonal issues, increasing costs and / or limiting programme delivery) Trend Page 8 of 16

9 5. Risk evaluation and treatment 5.1 The following table sets out a forward work plan for the period covering the remainder of 2017, with risk treatment measures and mitigation strategies to be implemented. 5.2 The work plan focuses on the three risks assessed as having the highest residual risk levels, in line with the preceding analysis and discussion. Page 9 of 16

10 TABLE: Risk treatment / mitigation strategies, from July 2017 # Risk name; category; description Risk treatment / mitigation strategy Actions and timeframe Risk Owner 1 Resource acquisition Strategic and programmatic Insufficient funds available at critical times to ensure needs addressed Enhance engagement with donors to increase the volume and improve the timing of contributions Strengthen communications with donors locally and in capitals through the publication of dashboards, monitoring and reporting updates, and other information products. This includes engagement with the continuing global roll out of the GMS Business Intelligence platform which puts Fund-level information into the public domain. In line with global developments, roll out the use of the Common Performance Framework as a means to better convey Fund performance to stakeholders including donors HC, Head of OCHA, supported by AB members and SSHF-TS Explore options for greater engagement with Units at OCHA HQs working on donor relations Encourage donor representatives on the AB to liaise with other representatives of contributing donors, to enhance understanding of positions and intentions 2 Misappropriation Financial Insufficient fraud mitigation and detection measures, and measures to mitigate the risk of looting, confiscation and diversion, fail to minimize exposure to misappropriation and loss of resources and dilution of programmatic impact Consolidate fraud mitigation and detection measures, and measures to minimise exposure to losses through looting, confiscation and diversion Continue to promote the use by implementing partners of the previously developed anti-fraud tool kit, through trainings and dissemination Strengthen due diligence procedures, including through the roll out of the due diligence module in the GMS Strengthen compliance with statutory reporting requirements in cases of actual or suspected misappropriation, through trainings, orientations, and the potential use of non-compliance measures Continue to interrogate cluster strategies and individual project proposals vis-avis the operating environment and exposure to potential losses, promoting the use of alternative delivery modalities as appropriate Head of OCHA, UNDP Country Director, supported by SSHF-TS Strengthen the timely reporting of losses by partners through awareness raising about the obligatory nature of reporting, and through the introduction of a standardised quarterly reporting template 3 Access Hazards Insecurity and other access impediments constrain delivery by implementing partners, as well as monitoring and reporting capability, diluting overall programmatic quality and impact Match funding allocations closely with implementing partner s ability to engage in particular locations and activities During each allocation round, continue to conduct a robust analysis of the feasibility of implementation of cluster strategies, and of individual proposals during project selection, in light of actual / probable conditions of access on the ground, as well as the partners capacities and performance in delivering results Strengthen situation monitoring within the SSHF-TS, in liaison with OCHA s Field Coordination and Access functions, to enable earlier engagement with partners likely to be facing implementation challenges and the need for re-programming Head of OCHA, UNDP Country Director, supported by SSHF-TS Page 10 of 16

11 6. Monitoring, Review and Reporting 6.1 Monitoring and Review are the first two stages in continually improving the Risk Management Framework. Risk owners are responsible, amongst other matters, for: (i) (ii) (iii) Regularly reviewing the risks owned by them, informing the SSHF AB of any significant changes, and escalating awareness risks for which the impact or likelihood is perceived to have increased; Monitoring risk treatment implementation relating to the risks for which they have responsibility, identifying any internal control deficiencies and proposing any additional, appropriate risk mitigation measures; and Updating relevant risk information and contributing to risk reporting as may be required. (a) Responsibilities 6.2 The HC, as the custodian of the SSHF, has ultimate responsibility for ensuring that this Risk Management Framework is updated and used. 6.3 The SSHF AB, in its advisory function, will consider the critical risks that the SSHF is facing and advise the HC accordingly. 6.4 The OCHA Head of Office (HoO) is responsible for the risk management of the activities of the OCHA South Sudan Country Office as a whole, which includes its management of the SSHF. 6.5 The UNDP Country Director is responsible for the risk management of the activities of UNDP related to its role as the Managing Agent for the SSHF for NGO projects. 6.6 This Fund Manager (Head of OCHA HFU) will have the main responsibility to ensure that risks and the status of risk treatment and mitigation measures are monitored. (b) Review The Risk Management Framework shall be reviewed when demanded by a change in circumstances, or as a minimum twice yearly: a substantive review and updating of the full Risk Management Framework once a year, and an interim light touch review half way between each substantive review. (c) Reporting An analysis of risk management activities should be incorporated as a key section in the annual reports of the SSHF. The top risks identified and corresponding mitigation strategies will provide the main content for such analysis. The SSHS TS will provide periodic reports on all aspects of the Risk Management Framework, including through updates at regular SSHF AB meetings. Page 11 of 16

12 Annex 1 Detailed description of identified risks 5 Risk 1: Coherence The risk that there is insufficient coherence between on the one hand the process of identification / prioritisation of needs, and on the other hand the process to allocate funds to particular projects and partners. This risk may materialise where the process of establishing prioritised needs to be addressed by any given allocation is insufficiently robust, or where the process of allocation of funds does not sufficiently reflect the intended prioritisation, or both. Risk 2: Resource acquisition The risk that there are insufficient funds available at critical times within the programme cycle to support allocations and ensure that needs are addressed. This risk may materialise where there is an insufficient number of participating donors, or where those donors that are participating are unable to contribute at the desired level. Risk 3: Monitoring and reporting The risk that arrangements for monitoring and reporting are insufficiently robust, affecting both the volume and veracity of feedback and information available to stakeholders. This may constrain the ability to oversee the project portfolio and the quality of decision making. It may also constrain efforts to ensure programme quality standards, including in relation to cross cutting issues such as gender and accountability to affected populations. Risk 4: Evidence based governance The risk that stakeholders have inadequate dominion over data related to the performance of the project portfolio as a whole, and to the performance of any given individual project, weakening the quality of decision making. It is related to risk 3 above, but refers specifically to the ability to manipulate and analyse available data (whereas risk 3 refers more to the generation of such data). Risk 5: Adherence to policies and decisions The risk that there is insufficient understanding amongst stakeholders of intended policies, procedures and processes, or that there is insufficient capacity to oversee and enforce adherence to such policies, procedures and processes, or both. This may result in discrepancies between the intended and actual use of funds, or in inefficiencies during the project cycle which dilute programme impact. There is some commonality with risk 1 above. Risk 6: Communications This refers to the risk that incomplete communications to different groups of stakeholders associated with the Fund negatively affects perceptions, credibility and support. Audiences may include donors, implementing partners, authorities, actors within the humanitarian coordination system etc. Risk 7: Advisory Board The risk that the involvement of the Fund s Advisory Board is inadequate to ensure robust oversight and guidance of processes. This may dilute the confidence of other stakeholders, and reduce the quality of decision-making. 5 Based on the detailed descriptions included in the previous versions of the RMF first developed in 2015, with some minor modifications for clarity, and the expansion of the scope of risk 8 to include misappropriation through potential fraud as well as losses of supplies and equipment through damage, looting and confiscation, as described in the main narrative of this RMF update. Page 12 of 16

13 Risk 8: Misappropriation The risk that insufficient fraud mitigation and detection measures are in place, such that exposure to the consequences of misappropriation of resources is not minimized, and the risk that insufficient mitigation measures are in place to minimise the potential for loss of supplies and equipment through damage, looting, confiscation and diversion, diluting programme impact. Risk 9: Absorption The risk of insufficient capacity in partners that receive funds to deliver projects effectively and efficiently, diluting programmatic impact. Risk 10: Reporting (financial) The risk of inadequate financial reporting from implementing partners, which may limit effective decision making and best use of financial resources across the portfolio as a whole. It also refers to the risk that the Fund s Technical Secretariat may have insufficient capacity to review and manage financial reports and partner performance, again constraining effective decision making. Risk 11: Work flows The risk that internal working arrangements within the Fund s Technical Secretariat are sub-optimal, leading to inefficiencies in the oversight and management of the Fund. Risk 12: Data management The risk that within the Fund s Technical Secretariat insufficient dominion over portfolio data may weaken the ability to provide efficient day to day management of the Fund. There is some commonality with risk 4 above. Risk 13: Coordination with clusters The risk that collaborative processes involving the Fund s Technical Secretariat, ICWG and individual clusters are not well aligned and integrated, affecting the rigour and quality of processes such as allocations, revisions and monitoring and reporting. Risk 14: Coordination with donors The risk of ineffective coordination with other funding streams, which may weaken complementarity and reduce overall programme effectiveness. Risk 15: Coordination with partners The risk of limited capacity for engagement and coordination between some implementing partners and the Fund and its processes, which may impact on opportunities to make best use of available resources. Risk 16: Access The risk of insecurity and other access impediments which may constrain both programme delivery by implementing partners and monitoring and reporting capability, affecting overall best use and impact of resources. Risk 17: Seasonality The risk that the cycle of donor contributions and allocations to implementing partners is insufficiently aligned to seasonal practicalities, potentially increasing costs and / or limiting programme delivery. Page 13 of 16

14 Annex 2 Parameters for risk analysis Risks identified can be assessed in terms of their likelihood and of their consequence. Consideration of these two factors determines the relative level of each risk, highlighting those most likely to materialise and which would have the greatest effect on the ability of the Fund to achieve its objectives. The analysis allows for a corresponding prioritisation of mitigation and treatment measures, investing efforts where they can be expected to be most beneficial for improved overall risk management. The following table sets out the scale and descriptors used to assess the likelihood of each risk (i.e. the probability and frequency of it occurring): Scale Descriptor Detail TABLE: Risk likelihood descriptors 1 Rare The event could occur, but probably never will. It is highly unlikely, but may occur in exceptional circumstances. There may be no history of occurrence 2 Unlikely The event is not expected to occur, but there is a small possibility it may at some time. There may be no, or very infrequent, history of occurrence 3 Possible The event may be expected to occur at some time, as there is a history of casual occurrence 4 Likely There is a strong possibility that the event will occur, as there is a history of frequent occurrence 5 Almost certain Very likely. The event is expected to occur in most circumstances, as there is a history of regular occurrence The following table sets out the scale and descriptors used to assess the consequence of each risk (i.e. the severity of impact, should the risk materialise): Scale Descriptor Detail TABLE: Risk consequence descriptors 1 Insignificant If the event occurs, the impact would be negligible or insignificant 2 Minor If the event occurs, the impact is unlikely to have a permanent or significant effect on the SSHF reputation or performance 3 Moderate If the event occurs, the impact on the SSHF reputation or performance could be significant. But the negative outcomes could be managed without major consequences in the medium term 4 Major If the event occurs, the impact on the SSHF reputation or performance could be significant, and would require major effort to manage and resolve in the medium term. But the negative outcomes do not threaten the existence of the SSHF in the medium term 5 Catastrophic If the event occurs, the impact on the SSHF reputation or performance could be significant and would require major effort to manage and resolve in the medium term. If not addressed, the negative outcomes will threaten the existence of the SSHF Page 14 of 16

15 Annex 3 - Review of progress as of May 2017 against risk treatment measures / mitigation strategies identified in October 2016 Risk name; category; description Monitoring and reporting Strategic and programmatic Insufficiently robust monitoring and reporting reduces quality of decision making and programmatic impact Misappropriation Financial Insufficient fraud mitigation and detection measures fail to minimize exposure to misappropriation of resources and dilution of programmatic impact Evidence based governance and management Governance and management; internal Inadequate dominion over portfolio performance and Risk treatment / mitigation strategy, identified in October 2016 Continue to consolidate on-going improvements in M&R practices. Continue to consolidate fraud mitigation and detection measures Enhance real time portfolio analysis through continuing consolidation of the use of the GMS Actions and timeframe Risk Owner Status Update, April 2017 Continue to embed the new M&R arrangements introduced from July 2016 (on-going) Ensure monitoring of a minimum of 30% of all projects funded, in line with global standards (as per plan for each allocation round) Consolidate remote monitoring approaches as a complement to field visits (4 th quarter 2016) Finalise the updated M&R Framework as part of the new SSHF Operational Manual (4 th quarter 2016) Ensure monitoring of a minimum of 30% of all projects funded, in line with global standards (as per plan for each allocation round) Consolidate the practice and coverage of financial spot checks for a risk based sample of projects (on-going) Produce summaries for the AB of the findings of external audits of NGO projects following each audit round (each audit round) Introduce the use of the partner performance index module in the GMS, for real time data analysis (1 st quarter 2017) Prepare quarterly reports summarising key findings from monitoring activities, as well as interim progress towards intended Head of OCHA, UNDP Country Director, supported by SSHF-TS Head of OCHA, UNDP Country Director, supported by SSHF-TS Head of OCHA, UNDP Country Director, supported by SSHF-TS The new M&R arrangements introduced in July 2016 have allowed for greater independence in terms of both the planning and scheduling of M&R activities, as well as in the articulation of findings. During projects had been subject to monitoring activities, exceeding the planning target to monitor a minimum of 30% of the project portfolio. This compares favourably with a total of 54 projects monitored in Remote monitoring was piloted during the third quarter of 2016 as an immediate response to the evacuation of the monitoring team due to insecurity in Juba. The approach is integrated into 2017 monitoring plans, as an ongoing complement to field visits. The M&R Framework was completed as part of the Operational Manual finalised in December As above, during projects had been subject to monitoring activities, exceeding the planning target to monitor a minimum of 30% of the project portfolio. This compares favourably with a total of 54 projects monitored in During 2016 a total of 133 financial spot checks of NGO partners were undertaken During 2016, external audits of 195 NGO projects were completed through two audit rounds. One summary presentation of audit activities and findings produced for the AB in October Availability of the PPI module in the GMS for roll out was delayed, and is now planned for Q2/ In 2016, Q1 and Q2 synthesis reports were combined and presented at the AB meeting in October. Q3 synthesis report was drafted in November, but not presented to the AB due to other competing agenda items. Q4 Page 15 of 16

16 data weakens rigour of HC / AB decisions and day to day Fund management by the TS Adherence to policies and decisions Governance and management Insufficient understanding amongst stakeholders weakens adherence to intended policies and procedures and dilutes overall impact Access Hazards Insecurity and other access impediments constrain delivery by implementing partners, as well as monitoring and reporting capability, diluting overall programmatic quality and impact Enhance stakeholder understanding of SSHF policies, procedures and processes, through continuing orientations and supporting documentation Continue to match funding allocations closely with implementing partner s ability to engage in more volatile environments results across the project portfolio (on-going, quarterly) Introduce the new Operational Manual with briefings and orientations to stakeholders including clusters and implementing partners (4 th quarter 2016, 1 st quarter 2017) Continue periodic orientations on key topics such as the use of different modules in the GMS and financial reporting (on-going, as per training plan) Continue to emphasise a robust analysis of the feasibility of implementation of proposals during project selection, with due attention to actual / probable conditions of access on the ground, as well as the partners capacities and performance in delivering results (during each allocation round) Consolidate the use of remote monitoring methods as an alternative to field site visits in insecure locations (4 th quarter 2016) Strengthen application of the updated protocol for project revisions, in support of timely decisions where reprogramming may be required as a result of insecurity and / or other access impediments (4 th quarter 2016, 1 st quarter 2017) Head of OCHA, UNDP Country Director, supported by SSHF-TS Head of OCHA, UNDP Country Director, supported by SSHF-TS synthesis report was dropped in favour of work to complete the 2016 annual report. The SSHF Operational Manual was finalised during December 2016 and disseminated to cluster coordinators and partners during 2017 Q1. At its meeting in February 2017 the AB reviewed a paper outlining the main changes implicated, and corresponding actions for roll out. To date, three orientation sessions have been conducted during Q2. To date, four dedicated training sessions on partner reporting requirements have been conducted during 2017 Q2. Throughout 2016 and continuing with the first standard allocation for 2017, allocation processes continued to give explicit attention to the feasibility of implementation, when vetting both cluster priorities and individual project proposals. The remote monitoring approach is integrated into 2017 monitoring plans, as an ongoing complement to field visits. The protocol for project revisions was updated as part of the Operational Manual completed during December Page 16 of 16