a) Establish a risk management mechanism to proactively manage risks within the GEF framework. This would include developing guidelines and processes for the GEF Secretariat and implementing agencies.
b) Drawing on the experience of other global partnerships like the Green Climate Fund and the Global Fund, the GEF should enhance transparency and efficacy in risk management practices going forward. These may include (1) establishing risk management processes, setting standards, and providing the necessary support to implementing Agencies; (2) monitoring compliance; and (3) ensuring consistent communication of risk appetite from the Council and the GEF Management.
Management Response
The GEF Secretariat agrees with this recommendation.
The GEF Secretariat will strengthen risk management and related support structures, within the confines of its operating model. This may include clarifying guidance in assessing and rating risk, and in identifying effective mitigation measures, as a way to enhance communication with Agencies on the risk appetite set by Council. The GEF Secretariat will also clarify further how it will report on the GEF risk appetite at the beginning of GEF-9, drawing from two years of implementation. Accountability on the risk appetite implementation currently takes place in the Work Program Cover Note and in the Monitoring Report.
At the level of the GEF, regular internal monitoring and planned public reporting on portfolio risk along the GEF Risk Appetite allow the alerting of any observed deviation. This acts as a transparent and accountable risk management structure, with communications to Council structured around regular monitoring exercises. Here again, the GEF Secretariat recognizes its indirect operating model differs from the governance structure of other funds which enter into direct agreements with accredited entities governing use and return of funds, outcomes and other elements and as such, are directly exposed to risk.
A key element of this aspect is ensuring that systematic monitoring takes place along the main milestones of the project lifecycle. Relevant GEF templates and related GEF Portal modules at PIF/PFD, CEO endorsement and MTR stages now include a dedicated section on Key Risks, aligned to the GEF Risk Appetite framework. This comes in addition to guidance from IEO to assess risk at completion with a view to supporting the sustainability of outcomes. The implementation of this framework involves ensuring quality risk assessments are provided during preparation and implementation.
Action Plan
The GEF Secretariat will strengthen risk management and related support structures, within the confines of its operating model. This may include clarifying guidance in assessing and rating risk, and in identifying effective mitigation measures, as a way to enhance communication with Agencies on the risk appetite set by Council. The GEF Secretariat will also clarify further how it will report on the GEF risk appetite at the beginning of GEF-9, drawing from two years of implementation.