Statement of Intent 2009-12: Part two - Managing in a changeable environment

Governance and risk management

Achieving our outcomes depends a great deal on identifying and treating risks. We do this through our governance structures and risk assurance frameworks.

The Commissioner chairs two governance boards:

Executive Board - examines longer term strategy, ethics, strategic risks and progress towards our desired future and outcomes.

Management Board - manages major operational issues, policies and risks.

Three committees support the governance boards:

• Project Governance and Investment Committee - oversees the approval, initiation and implementation of significant projects.
• Technical Governance Committee - facilitates and ensures the coordination of departmental effort on key tax issues.
• Risk and Assurance Committee - provides independent assurance to the Commissioner on effectively and efficiently carrying out his statutory responsibilities and accountabilities.

Projects are governed through steering committees, which apply a project management methodology.

Risk management framework

Our risk management framework follows the AS/NZS 4360 Risk Management Standard, which focuses on identifying, analysing and managing risks. The framework is integrated into our planning methodology and:

• applies to strategic and operational initiatives and projects - see “Operational risks” page 15
• helps us to identify organisational risks and opportunities and develop mitigation strategies
• includes an assurance perspective that supports the governance committees.

Strategic and operational risks

The following section outlines the key strategic and operational risks to Inland Revenue.

Strategic risks

Key strategic risks we have identified include:

Revenue base

There are constant threats to our revenue base from global and national developments and customer behaviours. In the economic recession we are expecting to see impacts on customer behaviour, particularly on compliance. This, in turn, could affect our revenue collections and increase the level of customer debt.

Community confidence and our reputation

If we do not understand increasingly diverse customer needs and deliver the right services to them our reputation could be negatively affected. Public confidence underpins voluntary compliance. So, if our customers do not trust Inland Revenue, this could undermine the voluntary compliance critical for an effective tax system.

The government may lose confidence in us if we are unable to anticipate and deliver services that meet their expectations.

People capability

If we do not attract, develop and retain skilled, capable people to meet the current and future needs of our customers, our ability to prepare and respond to policy and administrative challenges will be reduced.

Information technology

If Inland Revenue has poorly managed information systems there is a risk that speed of delivery of change will be compromised and failure of the core infrastructure is possible. This would lead to an inability to process data adequately, collect revenue, issue refunds and/or make payments.

Operational risks

Key operational risks we have identified include:

Capacity to manage tax changes and business as usual

There is a risk that the department does not have the resources to continue implementing the government's work programmes and new legislation, while also delivering contracted outputs. This has the potential to reduce the department's ability to deliver quickly and efficiently.

Department's capability and skills

There is a risk of a shortage of skills and capability in certain key areas, particularly legal tax technical and information technology specialists. Shortages could result in delays in the delivery of our services.

Ageing technology infrastructure

There are risks associated with some of the information technology systems we are operating, which puts pressure on our ability to make system changes quickly and efficiently.

Contract management

There are risks associated with the lack of a centralised system for recording and managing our contractual arrangements.

Approaches to mitigating risks

The department is aware of the main triggers that could heighten these risks. Some of the key mitigations that we use to manage these risks include:

• the department's governance structures (see page 14), as well as project governance and Enterprise Portfolio Management
• environmental scanning to ensure that we are aware of influences that may trigger risks
• the Transform IR programme
• the annual refresh of the corporate strategy set, which sets out treatments to managing specific risks.

Our approach to the mitigation of operational risks is achieved through the department's business unit planning, project methodology and associated work programmes (eg, the Compliance Management Programme).

 

 

 

Date published: 25 Jun 2009

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