Laura Sharman 26 June 2018

Councils warn about assessing risk of commercial projects

Councils are failing to understand the full risk implications when engaging in commercial activities, a new survey has warned.

The survey of risk professionals in 38 councils, conducted by Zurich Municipal, found less than half (49%) feel they and they colleagues have sufficient risk awareness when managing commercial projects.

The survey revealed that 93% of councils are engaged in commercial activities in order to regenerate income, with three-quarters making investments in commercial properties.

However, less than a quarter of those surveyed believed that their authority made decisions in these areas with a full understanding of the risk implications.

Rod Penman, head of public services at Zurich Municipal said: 'Innovation and greater financial independence are two extremely encouraging by-products of this trend that should be celebrated, but leaders in the sector must not forget that where there is opportunity, there is also great responsibility and risk.

'To safeguard the future of public finance and services, there is a real need to ensure the appropriate risk management measures are in place to avoid walking blindly into trouble.'

Despite these concerns, the survey did reveal that 59% of risk professionals believe that commercial activity to generate income has led to greater innovation, with 68% agreeing it had helped fund local services.

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