Six key approaches for Boards to get a glimpse of operational risk

A Board’s key functions are to provide supervisory guidance for company strategy, manage enterprise risks, hire, manage and fire (if required) the CEO and ensure financial solvency and legislative compliance of an organisation.

For some Board members, it can be hard to find the right balance between providing guidance and getting too involved in day-to-day management. Particularly for volunteer boards. So how can Boards get a glimpse of operational risk?

Here are six approaches you can take to create confidence that you’re receiving all the information you need to make good, defensible decisions as a Board member:

Receiving consumer feedback

Meeting with and hearing from both staff, residents and their families provide insight into operations and the broader context in which operational risks exist. This could be achieved in a number of ways:

• resident & family surveys
• staff surveys
• attending a facility function or event eg. Resident Christmas party
• participating periodically in resident engagement committees
• visit aged care sites

Awareness of critical incidents

Critical incidents can be another indicator of how well operational risks are managed. De-identified scenarios and their outcomes need to be routinely presented to Board, or via relevant quality or safety sub-committees. These incidents give a glimpse into the organisational systems and practices in which operational risks occur.

Hearing from senior managers about operational risk in their respective areas

As part of your regular Board agenda, include reports from senior managers on a rotating basis about their respective functional areas. Actively seek information on their top 3 issues and operational risks. Having senior managers present rather than just submit a report gives Board members the opportunity to ask questions directly of stream leaders.

Asking about company frameworks and policies

Frameworks, policies and procedures outline the organisation’s approach to managing operations.  Board members should seek information on company frameworks:

• When were the frameworks, policies and procedures last updated?
• What gaps are there in implementation?
• What is the plan to address these gaps and by when?
• What continuous improvement efforts are being considered and how are they governed?

Training and onboarding to help Board members interpret performance data

Skill mix on a good aged care board often includes a breadth of board member experience; perhaps a doctor or nurse, an accountant, a lawyer, etc. It is important that Board members understand both the sector challenges and the day-to-day issues that arise in aged care in order to ask good questions about operations.

Performance dashboards are not useful if Board members are not able to interpret and conceptualise data with informed curiosity about performance.

Investing in internal audit

Internal audit is an independent third party, initiated by the Board or Management, who audits your business practices. Internal audit provides an external perspective on the functioning and compliance of key areas of risk within an organisation. (Such as those in the table above).

Internal audit reports provide recommendations for improvements to your company practice and may make you aware of issues previously unknown to you.

The Risk Solutions team from Ansvar will be in attendance at the ACCPA 2023 National Conference 25-27 October at the Adelaide Convention Centre. Be sure to stop by booth #107 to speak to the team.

Source: Guest Post: Six Key Approaches for Boards – Inside Aging

Written by:

Stephen Ratcliffe, Senior Risk Consultant – ERM