Review of Commonwealth Government Business Enterprises ...

4.3 Managing Risks
4.3.1 The government is exposed to a number of risks associated with GBEs. This includes
fnancial, operational, political and reputational risks.
4.3.2 Risk management is ultimately the responsibility of the GBE board whose role it is to
identify, monitor and control the risks that may affect the operations of the GBE. The
current GBE Guidelines refect this.
4.3.3 The current GBE Guidelines also require corporate plans and progress reports to ‘contain a
statement’ that the board has appropriate risk management policies and practices in place
and that adequate systems and expertise are being applied to achieve compliance with
those policies and procedures.
4.3.4 Sections 17 and 42 of the CAC Act provide that GBEs are to report on strategies for
managing fnancial risk associated with investment/fnancing programs and analysis of
factors likely to create signifcant fnancial risk. However, given the government’s potential
exposure from the actions of GBEs and to enhance both transparency and accountability,
Finance considers that GBEs should be required to increase the level of information
disclosed in relation to risks in the corporate plan and progress reports.
4.3.5 More specifcally, Finance considers that corporate plans should include a summary of the
GBE’s risk management policy, material risks that the GBE will and is likely to face over the
period covered under the corporate plan, and strategies for managing these risks. 44 Progress
reports should inform the Shareholder Minister(s) of any emerging risks that were not
identifed in the corporate plan and strategies for managing these risks. This is consistent
with the ANAO’s views and recommendations on the risk management practices of GBEs. 45
The changes are also consistent with the JCPAA’s fnding that the GBE Guidelines clarify the
risk management responsibilities of the board 46 (part 3.3 of the Guidelines refers).
4.3.6 The current GBE Guidelines are silent on requirements for GBEs to behave as model
corporate citizens in respect to their taxation obligations. Finance considers it appropriate for the
revised Guidelines to provide a clear statement of an appropriate taxation management approach
for GBEs.
4.3.7 Please note that some of the changes proposed to address risk management are taken up
in proposed changes to Part 3, ‘Planning and Reporting’.
Exposure Draft
44 This is consistent with the ASX Principles (page 32), which suggests that a summary of a GBE’s risk management policies be disclosed. Refer
http://asx.ice4.interactiveinvestor.com.au/ASX0701/Corporate%20Governance%20Principles/EN/body.aspx?z=1&p=13&v=1&uid=
45 Australian National Audit Offce, Audit Report No.2 ‘Government Business Enterprise Monitoring Practices’, page 47 (September 1997), please refer to
http://www.anao.gov.au/uploads/documents/2000-01_Audit_Report_15.pdf
46 JCPAA Report 372, page 95.
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