The Board of Trustees and Management of the World Agroforestry Centre have reviewed the implementation of the risk management framework during 2007 and the Board is satisfied with the progress made.

The Board of Trustees has responsibility for ensuring that an appropriate risk management process is in place to identify and manage current and emerging significant risks to the achievement of the Centre’s business objectives, and to ensure alignment with CGIAR principles and guidelines as adopted by all CGIAR Centres. These risks include operational, financial and reputation risks that are inherent in the nature, modus operandi and locations of the Centre’s activities. They are dynamic owing to the environment in which the Centre operates. There is potential for loss resulting from inadequate or failed internal processes or systems, human factors or external events. Risks include:

• low impact science (and therefore irrelevance)
• misallocation of scientific efforts away from agreed priorities;
• loss of reputation for scientific excellence and integrity
• business disruption and information system failure; liquidity problems;
• transaction processing failures;
• loss of assets, including information assets;
• failures to recruit, retain and effectively utilize qualified and experienced staff;
• failures in staff health and safety systems;
• failures in the execution of legal, fiduciary and Centre responsibilities and;
• subsidization of the cost of projects funded from restricted grants and/or partial non-delivery of promised outputs, due to inadequate costing of restricted projects.

The Board has adopted a risk management policy – communicated to all staff – that includes a framework by which the Centre’s management identifies, evaluates and prioritizes risks and opportunities across the organization; develops risk mitigation strategies which balance benefits with costs; monitors the implementation of these strategies; and periodically reports to the Board on results. This process draws upon risk assessments and analysis prepared by staff of the Centre’s business unit, internal auditors, Centre-commissioned external reviewers and the external auditors. The risk assessments also incorporate the results of collaborative risk assessments with other CGIAR Centres, System Office components, and other entities in relation to shared risks arising from jointly managed activities. The risk management framework seeks to draw upon best practices, as promoted in codes and standards promulgated in a number of CGIAR member countries. It is subject to ongoing review as part of the Centre’s continuous improvement efforts.

Risk mitigation strategies include the implementation of systems of internal controls, which, by their nature, are designed to manage rather than eliminate risk. The Centre endeavours to manage risk by ensuring that the appropriate infrastructure, controls, systems and people are in place throughout the organization. Key practices employed in managing risks and opportunities include business environmental scans, clear policies and accountabilities, transaction approval frameworks, financial and management reporting, and the monitoring of metrics designed to highlight positive or negative performance of individuals and business processes across a broad range of key performance areas. The design and effectiveness of the risk management system and internal controls is subject to ongoing review by the Centre’s internal audit service, which is independent of the business units, and which reports on the results of its audits directly to the Director General and to the Board through its Audit Committee.

The Board also remains very alive to the impact of external events over which the Centre has no control other than to monitor and, as the occasion arises, to provide mitigation.

Lynn Haight
Chair, Board of Trustees
World Agroforestry Centre
April 2008