Response from DPMC and NEMA

Response to our recommendations about Strategic suppliers: Understanding and managing the risks of service disruption.

20 June 2023

Leeanne McAviney
Assistant Auditor-General – Sector Performance Group
Office of the Auditor-General Te Mana Arotake
PO Box 3928
Wellington 6011

Dear Leeanne

RE: FOLLOWING UP ON PERFORMANCE AUDIT OF Strategic Suppliers: Understanding and managing the risks of service disruption.

On 3 April 2023, we received your letter seeking an update on progress in relation to Recommendation 2 of the Performance Audit of Strategic Suppliers: Understanding and managing the risks (2021).

Recommendation 2 calls for better coordination by agencies to manage risk, including consideration of how we can build on existing initiatives to ensure strategic supply risks affecting important public services are well understood, managed and coordinated; and further, that roles and responsibilities are clearly assigned.

On behalf of the Department of the Prime Minister and Cabinet (DPMC) and its departmental agency, the National Emergency Management Agency (NEMA), thank you for the opportunity to provide a response on how DPMC and NEMA are progressing in relation to recommendation 2.

Our response is in two parts to distinguish between the roles of DPMC and NEMA.

1. DPMC's Response

DPMC oversees the National Risk Approach and National Risk Register which aims to ensure a coordinated approach is taken to nationally significant risks across government.

'Risk-coordinating agencies' are responsible for supporting a shared understanding of the risk across government, including by leading the assessment of risks and identifying opportunities to reduce risk and improve resilience. Your performance audit found it was not clear how information on strategic supply risks feeds into our processes for managing nationally significant risks (2.28).

In our letter to you on 19 March 2021, following our review of the preliminary report, we advised that we would be happy to work with the Ministry of Business, Innovation and Employment (MBIE) and other agencies identified, to consider how the National Risk Approach could potentially be leveraged. Initial discussions took place with DPMC, MBIE and other agencies to improve their understanding of the National Risk Approach, including DPMC's role in relation to recommendation 2; and information on planned future national security system reform. The future of the National Risk Approach remains under consideration in the context of these reforms.

While we have not progressed further since meeting with MBIE and other agencies due to insufficient resources, we will keep in mind the relevant findings of the Audit to assist our thinking on the future of the National Risk Approach and the role it could play.

To increase transparency on the risks we face, we published more detailed information on the DPMC website, including a summary of New Zealand's National Risk Register, late last year. For each risk, we have published a brief description of the risk, identified the risk coordinating agencies responsible and provided (where possible) further information on agency-level plans to manage and build resilience to these risks. Our goal is to help increase shared understanding across government and with the public about the risks we face. You can view this information here: New Zealand's Nationally Significant Risks | Department of the Prime Minister and Cabinet (DPMC).

2. NEMA's Response

Thank you for incorporating our feedback (letter 30 April 2021) on the draft report to include NEMA as one of the agencies responsible for recommendation 2, based on the statutory obligation of the Director of Civil Defence Emergency Management to identify nationally significant risks under the Civil Defence Emergency Management Act 2002 (section 8(2)).

NEMA's role is to work across central government and with local government and others to create an emergency management system that is ready and able to provide an effective and integrated response to, and recovery from, emergencies. We have discussed our role, as it pertains to recommendation 2, with MBIE and the other responsible agencies.

NEMA has been working with agencies and other public/private sector organisations to develop plans for response to, and recovery from, emergencies. This includes establishing national and regional coordination arrangements across the lifeline utilities sectors and agencies. NEMA has also supported lead agencies with their response to a range of hazards and risks from natural and human causes, including COVID-19 and climate change. This includes working with the newly-established Cyclone Recovery Unit within DPMC.

An important feature of the emergency management system is the role local government undertakes through Civil Defence Emergency Management Groups (CDEM Groups). In April 2022 NEMA published Risk Assessment: guidance for CDEM Group planning to aid CDEM Groups conducting risk assessments to inform CDEM Group planning. The Guideline provides a mechanism to ensure a consistent approach to risk planning across the sector.

The support provided by NEMA ensures each CDEM Group, and the participating Local Government agencies, are better placed to identify and reduce risks where practical and build readiness and resilience for better response and recovery for future emergencies. All CDEM Groups have completed Group Plans which are published on the Civil Defence website.

Yours sincerely,

Rebecca Kitteridge
Chief Executive

Cc: Dave Gawn, Chief Executive, NEMA