#GGI10th - GGI in 2012 - Risk Appetite for NHS Organisations | Good Governance Institute
Good Governance Institute 10 Years #GGI10th

GGI in 2012 

Risk Appetite for NHS Organisations:
A Matrix to support better risk sensitivity in decision taking


2012 saw the beginning of the transitional re-alignment of commissioning in the NHS with the move from the former Primary Care Trust-based (PCT) commissioning system to one with Clinical Commissioning Groups (CCGs) taking over this responsibility. In the context of these changes, along with new responsibilities such as the duty of candour and the NHS coming under competition law, GGI saw the need for the NHS to revisit its risk managements systems.

As defined by HM Treasury in the 2005 Orange Book, risk appetite is ‘the amount of risk that an organisation is prepared to accept, tolerate, or be exposed to at any point in time.’ As such, it is a window into a tangible understanding of the collective mind of an organisation’s leadership. Understanding risk appetite helps a Board to achieve insight into whether they genuinely have an agreed approach to leading the organization, and the the levels of risk that are legitimate for them to take.

Working with colleagues in Southwark CCG and what was then the Southwark Business Support Unit, as well as colleagues elsewhere in the NHS, GGI developed ‘Risk Appetite for NHS Organisations: A Matrix to support better risk sensitivity in decision taking’. This resource presented a high-level outline of risk and risk appetite; a maturity matrix by which boards can develop their own generic risk appetite and which can also be applied to specific risk; and a case study scenario to help boards work through risk appetite issues.

As with all GGI tools and resources, the focus is on practical relevance and how concepts such as risk appetite can be applied to enable NHS Governing Bodies and corporate teams to make better decisions. The resource was used by a number of NHS Boards to connect live issues with risk appetite implications, both from the individual perspective of clinical leads and agreeing consensus as a corporate team.

Interestingly, the experience of ‘pathfinder’ CCGs utilising risk appetite has been mirrored in some of GGI’s later work with Integration Joint Boards in Scotland, as well as with emergent Integrated Care Systems and service collaborations in the English NHS.