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Enterprise Risk Management Approach to Care Homes at Last

The recent announcement that the Care Quality Commission will receive new powers to examine the financial stability of care home providers is, of course, welcome; but why has this taken so long?  Indeed one wonders if, had it not been for the collapse of Southern Cross, this move would have taken place at all?  It stands as a stark example of a silo-based approach to risk management that leads to inefficiency and waste.

The Civil Contingencies Act (2004) placed a statutory duty on Local Authorities (amongst others) to “assess the risk of an emergency occurring” and “maintain plans for the purposes of ensuring that…if an emergency occurs the person or body is able to continue to perform his or its functions.”  This has led not only to a renewed focus on business continuity management within those organisations covered by the Act but also, and very importantly, to demands being placed on their key suppliers to demonstrate that they have made appropriate business continuity arrangements.  We have seen this positive development first hand as we have worked with various care home providers to develop and exercise their plans.

Unfortunately, nearly 10 years after the Act passed into law, many commissioning organisations do not appear to have carried the argument through to its logical conclusion and also sought assurance that financial risks are being managed by these same suppliers.  This is all the more surprising as we are now 5 years into an economic downturn where the failure of businesses, large and small, has sadly become all too frequent.  It would appear that the drive towards enterprise risk management (ERM) still has some way to go.