Local Government failing to act on risks: report

Infrastructure, financial sustainability and health and safety are the greatest risks for local government, according to a new analysis that finds many councils are failing to adequately prepare.

The report, prepared by Aon, makes clear the human risk on Local Government but reveals that half of all councils in Australia are failing to execute simple practices to ‘rein in that risk.’

This report also includes Aon’s Local Government insurance market overview with a focus on property, general liability and professional indemnity.

Report highlights

Finance first - Not surprisingly the unrelenting challenge to do more with less ensured that the financial challenges of infrastructure, financial sustainability and stability lead the list of risks for local government. It’s been that way since Aon started this benchmarking series in 2015.

Human impact - Health and safety, cyber, reputation and human resources concerns have all leapt higher as councils count the risk and cost of human impact. Many councils however are missing the chance to take simple steps to reduce human risks – it’s an opportunity to grasp.

Mother Nature - After a relatively benign 2017 nationally, weather dropped way down the list of risks. Soon after Aon’s survey concluded however, Mother Nature threw her curveballs: Darwin faced Cyclone Marcus; Tathra, NSW and Victoria’s South West were devastated by bushfires; North Queensland was flooded. A reminder not to get too comfortable.

Opportunity knocks Councils are clear about how they rank risks – but when it comes to managing them not all councils are investing in the best practice strategies and processes that promise greatest protection.

Forward thinking councils engage in effective data-backed risk profiling, gap analysis and loss limiting. They develop strategies and implement processes to enhance employee engagement and protect the wellbeing of workers, and test emergency management and business continuity plans. They measure and manage their risk appetite and test the market for the most effective coverage. Avoiding overbuying frees financial resources to employ into council programs and projects for the benefit of the community. Their good practice is a beacon for the rest of the sector.

Significant swing - There are signs that the status quo is under threat as councils seek out better insurance and risk management arrangements. Two years ago fewer than one in ten councils leveraged independent brokers and commercial insurance – today one in four is testing the market. Getting coverage right is critical – 86 per cent of councils made claims in the last 12 months.

Download the Report here.

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