Risk management policy in development cooperation
Risk management is part of the planning, management, steering and quality management of development policy and development cooperation. In addition to the development cooperation activities of the Ministry for Foreign Affairs and its missions abroad, it covers activities that the Ministry for Foreign Affairs is responsible for under legislation, agreements or other obligations.
The risk management policy of the Ministry for Foreign Affairs defines the general objectives, principles and responsibilities of the Ministry’s risk management. A separate risk management policy for development cooperation complements the risk management policy of the Ministry for Foreign Affairs.
Development cooperation involves risks that are sometimes difficult to anticipate. The objective of risk management is to ensure the effectiveness and impact of development cooperation in uncertain circumstances. When support is targeted at areas where the need is greatest, the risks of cooperation are often higher.
The risk management policy of development cooperation guides the activities throughout the life cycle of cooperation projects:
- During the preparatory phase, the Ministry for Foreign Affairs determines the objectives and ways of implementing the cooperation in question. At the same time, any risks that may be encountered while pursuing the activities as well as means to manage them are assessed.
- Grant decisions are based on the best possible knowledge of the risks and the probability of risks. The risks are assessed in relation to the objectives set for cooperation.
- Funding agreements and decisions on discretionary government grants take into account the risks associated with the cooperation and include conditions for monitoring, evaluation and oversight.
Comprehensive risk management improves the ability to respond to sudden and unforeseeable risks. Reported and analysed information on actual risks and needs for change is utilised in risk management, thus creating preconditions for continuous learning.