UNDP Risk Management in the Global Fund Portfolio
The Global Fund supports countries in pursuing ambitious targets, resulting in a direct impact on HIV, TB and malaria epidemics, which often include the provision of lifesaving services. In supporting countries to achieve these targets, UNDP implements grants in some of the most challenging operating environments. Implementing projects in these contexts substantially increases the risk of the projects failing to deliver the intended results, organizational reputation and loss of assets. Furthermore, because projects are implemented in high risk environments, often in countries with weak governance and other systems, the risk of abuse of funds (at all levels) is very high. This includes the risk of diversion of health commodities. Finally, because the Global Fund-supported projects are part of a wider national disease strategy, UNDP engagement in project planning is lower than in other UNDP projects. As a consequence of limited Principal Recipient (PR) engagement during the project planning (funding request) stage, in certain cases operational risks are not thoroughly identified and fully addressed. National proposal writing teams usually include health experts with limited project management expertise, who may not adequately identify implementation risks during the planning stage. Therefore revisions of project plans to include risk treatment options may be required during start-up, grant-making or once implementation is in progress.
Since Global Fund supported projects are considered higher risk than other UNDP-implemented projects, there are several enhancements in terms of controls and assurance in addition to the risk management applied to all UNDP projects. This refers to tailored approaches and tools used by UNDP in the Global Fund portfolio that aim to strengthen controls and systems to prevent, mitigate or better monitor risks. This reduces the probability and impact of programmatic and operational risks. The contextual risks external to the project remain with the Country Office (CO) managing the projects, to address through the business continuity plan or crisis response.
Some of tailored approaches and tools aimed at preventing or mitigating are as follows:
- Limited procurement by Sub-recipients (SRs). UNDP COs serving as PRs should not engage SRs to procure health products. Non-health procurement is limited to an SR agreement budget of US$100,000 or 10 percent of the total SR budget, whichever is lower. This measure ensures best value for money by allowing UNDP to undertake higher volume procurement, while ensuring all quality requirements for health products are observed.
- Specialized procurement architecture for procurement of health products. Timely delivery of quality assured products is essential to ensure continuous provision of lifesaving services and minimize the risk of service interruption. To ensure expertise in this highly specialized area, the UNDP Global Fund/Health Implementation Support Team ensures a service level agreement with UNICEF is in place for key products used in the Global Fund-financed grants. Further, the UNDP Global Fund/Health Implementation Support Team completes the selection and contracting process and maintains long-term agreements (LTAs) with suppliers of other health products used in Global Fund grants. Such arrangements have several positive effects, such as reduced delivery time (as each CO does not need to repeat the bidding process, but can just use existing contracts); volume discounts and other better terms due to market power; easier negotiations with key suppliers, product quality assurance and prevention of collusion in procurement. For more information please refer to the procurement and supply management section of the Manual.
- Control Self-Assessment (CSA). As part of UNDP’s commitment to risk management, UNDP found it particularly useful to strengthen risk management in the context of the Global Fund portfolio. The CSA allows programme teams directly involved in business units, functions or processes to participate in assessing the project’s risk management and control processes and identify additional risk mitigation actions. One of the major benefits of the CSA approach in Global fund-financed grants is that the entire team working on a programme (e.g. finance, procurement, M&E) understands what the key risks are and what controls are in place or need to be introduced to better manage them.
CSA is particularly useful for new PRs or before starting a new grant, as the effects of increased controls span over the life of the grant. UNDP COs interested in going through Control Self-Assessment should contact the UNDP Global Fund/Health Implementation Support Team.
 At different points, roughly half of the UNDP Global Fund portfolio is in countries characterized by the Global Fund as Challenging Operating Environments.