The Board of Trustees and Management of World Agroforestry reviewed implementation of the risk management framework during 2008 and the Board is satisfied with the progress that has been made. The Board of Trustees is responsible for ensuring appropriate risk management processes are in place to identify and manage significant current and emerging 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. Such risks include operational, financial and reputation risks inherent in the nature, modus operandi and locations of the Centre’s activities. These risks 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:

• 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;
• failure 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;
• withdrawal or reduction of funding by donors due to the global financial crisis;
• potential negative impact of the CGIAR change management process in terms of funding or nonprioritization of agroforestry; 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 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 on risk assessments and analysis prepared by staff of the Centre’s business unit, internal auditors, Centrecommissioned external reviewers and 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 is aiming for best practice, as documented in the codes and standards of a number of CGIAR member countries. The framework is subject to ongoing review as part of the Centre’s continuous improvement efforts.

Risk mitigation strategies include 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 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 framework 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 to the Director General and the Board through its Audit Committee.

The Board also remains very much aware of 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