Some ideas for a potential risk management strategy
In our previous post we discussed the importance of understanding the vulnerabilities and weaknesses at the different stages of a water and sanitation program cycle. Here, we would like to look at potential strategies to help reduce integrity risks and prohibited practices such as fraud, corruption, collusion and coercion.
The literature suggests that projects executed in the Water and Sanitation (WSA) sector face a heightened integrity risk. (if you are interested, you can read detailed studies here and here). These are just few examples of how the integrity risk materializes in WSA programs, without taking any preventive actions:
- Kickbacks to influence program priorities or conditions, as well as kickbacks to win contracts;
- Bid rigging by contractor cartels or throughout agreements between public officials and contractors;
- Performance fraud in execution –e.g. use of substandard materials, falsified invoices and the use of shortcuts in the field–; and
- Petty bribery to have access to water, speed treatment, falsify meter readings or conceal illegal connections.
Adopting an integrity risk management strategy, might not only reduce the likelihood or the impact of prohibited practices occurring in a program, but more importantly, contribute to close the coverage gap in water and sanitation services in the region.
We are proposing a risk management strategy as a virtuous circle comprised of the following stages:
- Analysis of the context in which the program is implemented: identifying who the relevant stakeholders are, understanding their interactions and their drivers to pinpoint the incentives that might serve to influence their behavior in a manner that is compatible with their preferences.
- Definition of risk indicators and data-gathering: the collection of the information needed to assess the risk level. The risk assessment will serve to identify areas for action and to prioritize actions.
- Agreement among stakeholders regarding areas for action: Given the myriad of aspects that affect a program and the different constraints faced – financial, human, and of time –, it is important to reach an agreement as to which are the priorities for risk mitigation as well as to which would be the role of each party in the process.
- Implementation of mitigation measures: Once an agreement is reached by the stakeholders, the agreed activities will be put into practice.
- Monitoring and evaluation (M&E) of the outcome of the adopted actions: Risk management is a continuous process, therefore it is crucial to assess whether the mitigation measures are having the desired effect. This M&E process serves to determine whether a different course of action is needed or not and will close the circle by informing the next round of risk assessment.
As we mentioned before we are not thinking in a one-size-fits-all approach, but rather in an approach that should be tailored to particular needs. Are there any steps missing? Who are the key actors to keep involved? What are the tricky parts to implement? We’d love to hear your ideas!