Council's risk management at a premium

Article image - Council's risk management at a premium Maroondah Team Leader Risk Management Vicki Miller and Risk Management Insurance Officer John Carroll.

Risk management is an important part of management in Local Government and Maroondah City Council is leading the way.

An integral part of the Council's combined public liability and professional indemnity mutual insurance program is the obligation to participate in the Victorian Civic Mutual Plus (CMP) risk management audit.

Maroondah City Council CEO Frank Dixon said the audit encourages the development and maintenance of sound risk management practices to support each council in achieving its strategic objectives and mitigating unwanted risks.

"It also reduces claims exposure and moderates insurance premiums," he said.

"We used the vehicle of the audit as the impetus to advance and embed corporate wide development of risk management practice."

It provided a specific goal, a timeline, a team of committed employees and a suite of criteria based on the then Australian Standard AS/NZS 4360:2004.

Frank Dixon said the challenges Maroondah faced were no different to any other outer suburban Melbourne council. "Maroondah is a large organisation with great diversity in service functions ranging from maternal child and health care to managing an extensive underground drainage network covering 61 square kilometres." he said.

In 2008, in consultation with relevant employees and the Corporate Management Team, an audit target score of
84 per cent was set and a project plan designed to deliver this aim, including:

  • active executive and senior management support
  • a team approach by responsible officers
  • action plan and progress reporting structure
  • self audits by reciprocal service area managers

Council achieved a final audit score of 91 per cent, 11 per cent higher than the State average.

Frank Dixon said Council's performance in this audit is directly associated with our insurance premium. In the past five years substantial reductions have been achieved in Council's CMP premium.

This was due to the combination of a high risk management audit score, low claims experience and voluntary higher excess, together with changes to contribution calculation methodology and general market forces. Council's 2010-2011 premium has reduced by approximately $300,000 (excluding GST) when compared with the premium for 2006-2007.

Maroondah City Council was taken by great surprise in May 2011, when CMP advised that Council had been awarded the 2008-2010 CMP risk management excellence award. This award represents the most significant improvement in audit score performance across 78 Victorian Councils.

Invariably success attracts attention and this had led to approaches by several councils to seek assistance in their journey of embedding risk management.

Frank Dixon said while exceeding Council's expectations, the score can be directly linked back to the outstanding leadership of Council's Risk Management Team.