On March 31, Global Fund Chief Risk Officer (CRO) Cees Klumper presented the second in a series of regular annual reports to the Board on Risk Management.
Cees highlighted three risks:
- Information technology (IT) systems – Corrective Action: upgraded from a Medium to a High risk
- Global Fund culture – Corrective Action: downgraded from a High to a Medium risk
- Foreign exchange risk – Corrective Action: now added to the organizational risk register
Our Board Member, Ton Coenen, made the following comments:
Ton called for Cees to pay more attention in his report to strategic risks (most important the risk of a lack of impact).
Regarding the first risk, the Global Fund suffered “very severe disruptions” due to an IT systems failure in December 2014 and January 2015. Ton expressed concern about the absence of analysis in the report around the impact of IT risk events and noted delays in current IT projects (SharePoint and Salesforce). He called for Global Fund Chief Financial Officer (CFO) Daniel Camus in his assessment of the recent IT risk event to: 1) address whether back-up systems had been tested and vendors have any liability for the event and should pay any financial penalties and 2) provide clear timelines for the completion of the Salesforce project by end of 2015.
Regarding the third risk, the Global Fund suffered substantial exchange losses in 2014. Cees expressed his opinion that the Secretariat has put in place “reasonable risk mitigation measures.” Ton highlighted the external factors that have prevented the implementation of these mitigation measures. Changes in the international financial regulatory environment have prevented the establishment of relationships with commercial banks, and the lack of privileges and immunities have prevented the securing of bank accounts in countries. In response to his intervention, the Global Fund Secretariat agreed to inform the Finance and Operational Performance Committee (FOPC) on the timeline for establishing the relationships with commercial banks and any anticipated delays and obstacles to meeting the timeline.