Risk management for UNDP Global Fund portfolio in high-risk environments

In addition to measures for crisis response applicable to specific UNDP Country Offices (COs) there are additional provisions to consider for Global Fund grants implementation in high-risk environments.

The CO/Principal Recipient (PR) should check with the Global Fund whether the country (or affected region within a country) is classified as a Challenging Operating Environment (COE), which could mean additional Global Fund policy flexibilities are applicable.

The main principle for managing Global Fund grants in high-risk environments is the increased need for UNDP CO/PR to manage risk, document this process and communicate. During grant-making/reprogramming request or defining project stage/grant-making, risks should be identified and risk treatment planned and reflected in project plans. If the onset of crisis is sudden, one of the first steps to be undertaken is analysis of risks created by the crisis, and identification of immediate responses required.

By default, implementing grants in high-risk environments means higher risks. The need to continue delivery of lifesaving services calls for agility and flexibility in procedures (both UNDP Fast Track Policy (FTP) and Global Fund COE provisions). Since existing procedures are part of internal controls, relaxing them means the organization is accepting higher risk. According to the standard Grant Agreement, the PR bears all grant-related risk. Therefore, in high-risk environments the PR should consider the following:

• Ensuring uninterrupted services in the high-risk environment may require a change in implementation arrangements, especially if the crisis onset happened after grant signing. In situations of natural disaster or armed conflict the project beneficiaries may be displaced and a quick assessment may be required to understand how to provide health services in the changed circumstances. Supplying health products to new service delivery spots may require changes in pre-crisis practice.
• Safety risks to project beneficiaries and staff should be carefully examined. This is applicable not only in areas of armed conflict or natural disasters, but also where activities of key affected populations are criminalized. Immediate risk mitigation measures in such circumstances include ensuring confidentiality of beneficiary data, controlled and limited access to records, use of unique identifier codes and partnering with national institutions. Long-term measures include policy work to change punitive laws.
• Communication and consultation as part of risk management is essential in high-risk environments. It is necessary to discuss the risks, causes and impact with Sub-recipients (SRs), and jointly plan risk treatment. It also involves discussing risks with other key project partners at the country level, since common risk mitigation measures may be applied. Finally, it is very important to communicate about risks with the Global Fund and flag any “unknown” areas. For example, in case of armed conflict outbreak in part of the country which prevents access to sites, the Global Fund should be informed about the PR’s inability to access and verify assets in the conflict zone, and the Global Fund should decide if this is acceptable.
• In the given circumstances, can the PR honour the obligations undertaken under the Grant Agreement with the Global Fund? For example, the Global Fund can request that all assets purchased with grant funds are returned to the Global Fund. In situations of armed conflict, the PR should flag the uncertainty related to physical verification and control of assets which will be given to SRs in the zones not accessible to the PR. Other example includes access to service delivery sites for verification of programmatic data.
• Whether the programme objectives are realistic – This is particularly important in situations where the context changes after the grant is signed. The PR should undertake an analysis of assumptions used to set the original targets, and their validity in the changed circumstances. When necessary, a reprogramming request should be submitted to the Global Fund.
• Weaknesses in national systems and capacity is often the main contributor to high-risk environments for Global Fund grant implementation. This is addressed by midterm capacity development measures, aiming to address root causes. In the short-term, mitigation measures can include outsourcing and engaging technical assistance for key implementers. For UNDP-managed grants, in case of weak capacity for financial management at SR level (as determined by the SR capacity assessment) transfer of funds to the SR is usually avoided and SRs implement sub-projects through direct payment modality.