KAMPALA PRINCIPLE 5:MNCs_SUBP 5.D

Sub-principle 5.D

Establish provisions to mitigate and manage risks

 

Why is it important?

 

Good risk management is achieved through the sustained application of a systematic process. It requires skill and time for identifying and assessing risks. Risk management also needs to be applied holistically at all stages of a project’s life cycle. Due diligence and risk management are important to avoid and address adverse impacts related to workers, human rights, the environment, bribery, communities, reputational damage and governance that may be associated with operations, supply chains or other relationships. Development co-operation projects and partnerships should operate in line with the tenets of presumed full disclosure and transparency, the principles of accountability, the provision for public oversight, a public consultation mechanism, and a publicly communicated complaints mechanism, including public reports on the outcome of complaints in line with due diligence principles and guidelines. Examining the sustainability impacts of business processes and practices (including along value chains) can help companies detect and mitigate risks.

Self-reflection questions
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  • In the development co-operation projects in which you are involved, is the monitoring of risks integrated into project implementation? Have enough resources been dedicated to monitoring? 
  • Have you put mechanisms in place to deal with conflicts of interest – where a decision or action is right for the partnership but maybe at odds with individual companies’ interests? 
  • Have you developed a risk mitigation strategy as well as an exit strategy for the project? 
  • Can the partnership use your company’s risk management system for the project?

Actions to consider
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  • Carry out regular risk assessments against purpose, implementation plans, indicators and expected behaviour with all partners in the private sector engagement (PSE) project and correct course when necessary. 
  • Anticipate, manage and mitigate conflicts of interest in PSE partnerships. 
  • Include assessing gender impacts and human rights frameworks as part of your risk mitigation strategy.
  • Build a framework that supports a learning partnership that supports employees and management to experiment and discuss and share lessons learnt.

Pitfalls to avoid
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DON’T…

  • Discourage innovation, experimentation, tolerating failure or taking risks in the partnership.
  • Stop communicating openly with partners, staff and stakeholders about the approach for handling conflicts of interest.

COUNTRY-LEVEL EXAMPLES

Swiss Re’s approach encourages humanitarian organisations and governments to conduct their own risk assessment and professionalise their risk processes and practices. Swiss Re sees this approach as providing an additional benefit to humanitarian clients beyond a commercial relationship, where clients develop their own models and mechanisms to deal with their risk appropriately.


ABB and LafargeHolcim both have partnerships with high-profile international humanitarian organisations working in locations where the companies operate. They identified training and security briefings provided by these humanitarian organisations as a motivating factor for engagement

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