Recent worldwide financial events have served to highlight the importance of having in place up to date and accurate risk registers that clearly identify the risks posed to your service(s) and the actions that could be initiated or are being taken to control risks.

Risks currently associated with the economy

This briefing is intended to help you in managing the potential threats/opportunities posed by the recession so that you can consider the risks, update your risk register(s) and take the appropriate action.

Suppliers of equipment, services and systems that you use in the delivery of your service are potentially under threat.

• There is a risk that some suppliers may go out of business.
• Some suppliers may be cutting their own resources which may lead to reduced quality or other delivery problems.
• Supplier costs may rise.
• Checks on suppliers that were conducted early on in the procurement process may no longer be valid.
• Suppliers may not their own have robust business continuity arrangements.

Suppliers - proposed actions that you may wish to consider

• Revisit procurement financial checks.
• Exercise any rights under the contract to audit suppliers.
• Monitor stock exchange announcements, company reports etc.
• Talk to your suppliers - discuss issues/concerns, how can you help them.
• Prepare contingency plans - alternative provider of services, in-house provision.

Existing procurement contracts

Banks may exercise options to withdraw, restructure or otherwise change the terms of funding to contractors. These changes will, in turn, impact on service delivery.

• Some contractors may go out of business.
• Contractors may seek to withdraw from existing contracts early.

Existing procurement contracts - Actions to consider

• Check the cash and debt positions of contractors - don't rely on out of date ratings.
• Check who holds guarantees and contract conditions - contracts and guarantees should include the parent organisation.
• If a contractor is getting into difficulties consider renegotiating terms (within the rules of procurement) and have contingency plan(s).

Procurement of new contracts

Contractors are finding that the number of funders needed to deliver large Private Finance Initiative (PFI) and Public Private Partnership (PPP) contracts is increasing and the costs of deals are likely to rise.

• The cost of funding is undermining the economics.
• Deals are taking much longer to agree - bank's appetite falling, more banks needed for each deal - impact on timetables.
• Structuring deals has become more complex and difficult.
• The cost of putting together bids is too costly and so contractors, when faced with lots of tenders, are choosing which ones to bid for.

Procurement of new contracts - Actions to consider

• Consider alternative financing models - multiple partners for example.
• Restructure elements of very large contracts into smaller more manageable elements.
• Conversely, on smaller contracts, group with other services to ensure the contract is attractive to the market (collaborate with other services either in Camden, with other agencies, or with other authorities).  This will cut down the bid cost for suppliers and enable you to leverage your spend to achieve greater efficiencies.

Investments & income sources

• Further banks / financial institutions may fail.
• Falls in shares / stock market may reduce value of investments.
• Falling property values may reduce value of assets & the ability to reinvest in the Council's infrastructure.
• Income sources may be reduced - Citizens reduce spending or get into financial difficulties (council tax, rent arrears etc).

Investments & Income sources - Actions to consider

• Regularly review investment strategies.
• Seek to spread risks wherever possible.
• Continue to monitor and review ratings of banks and other financial institutions.
• Regularly monitor and update the value of assets.
• Have contingency plans in place to deal with falling income streams wherever feasible.