The Board has approved a new Global Fund Risk Management Policy. Before the Board vote, Global Fund Chief Risk Officer Cees Klumpers presented his first regular twice-yearly Risk Management Report. He identified the three lines of defense in risk management: 1) Global Fund Management, 2) the Risk Management Department; and 3) the Office of the Inspector General (OIG).
- by Jason Wright
The Chief Risk Officer described risk management as adequate with a need for further improvements. The current level of risk in the grant portfolio as measured by a Portfolio Risk Index (PRI) has been reduced from 2.04 to 1.86 on a scale from 1 being the lowest to 4 being the highest. The report describes the risk reduction as a result of efforts by Global Fund Country Teams including:
- Use of the Pooled Procurement Mechanism
- Efforts in strengthening Financial Management Systems and Principal Recipient (PR) capacity
- Introduction of fiscal agents in more grants
The report identifies the five greatest risk types for the Global Fund:
- Not achieving program outcomes and impact targets
- Inadequate monitoring and evaluation (M&E) and poor data quality
- Poor financial reporting
- Poor quality of health services
- Treatment disruptions
The Global Fund Secretariat sees the implementation of the New Funding Model (NFM), the development and piloting of alternative grant management models, and the trend toward more pooled procurement as opportunities to further reduce risk.
The new Risk Management Policy replaces the Risk Management Framework approved by the Board in 2009. The policy is accompanied by an Enterprise Risk Management Framework. The new Risk Management Policy codifies existing risk management practice already in place or significantly strengthened over the past three years.
Developed Country NGO Board Member Ton Coenen made a forceful intervention before the Board vote. He noted that since 2012, the Secretariat has reduced the risk of fraud but not the risk of treatment disruptions. He cited that 30% of deliveries of commodities have not been on time and in full. He stressed that the focus in risk management must be on maximizing health impact.