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Achieving Impact and Value for Money in Conflict-affected Environments: DFID’s Approach to Managing Fiduciary Risk

Evaluation and Lessons Learned
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The UK government has committed to spending 50% of DFID’s budget in fragile states and regions – many of which are affected by conflict. In these complex environments delivering effective and accountable aid is a significant challenge, but they are also the environments where needs are greatest.

This review will assess DFID’s approach to fiduciary risk management in conflict-affected environments where DFID has restricted access. Limited access to the locations where aid is being delivered, due to insecurity, often means there are fewer channels available to deliver and monitor aid and this may lead to the risk of fraud, corruption or misuse of funds becoming heightened. The management of fiduciary risk in conflict-affected contexts is therefore a key factor in UK aid’s ability to achieve impact and value for money.

The review will explore how DFID assesses and manages fiduciary risk within its country portfolios and projects, and how it balances fiduciary risks against the potential opportunities and benefits of delivering assistance in challenging environments. It will consider what it means for DFID to have a high risk appetite whilst maintaining a zero tolerance to fraud and corruption. These issues will be examined within the context of the evolution of DFID’s overall approach to risk management to assess the extent to which lessons have been learned and applied.

The review will assess the full cycle of fiduciary risk management, from the assessment of environmental risks and partner capacities through to decisions on which types of risk to tolerate and how those risks are managed and monitored through programme design and delivery. This will include examining how DFID approaches managing risk within complex delivery chains and where there are multiple actors operating in similar spaces. We will focus on environments where DFID’s physical access to implementation sites is severely constrained, limiting its delivery options and increasing its reliance on third parties to monitor its programmes.

This will be a performance review. It will focus on a core DFID business process and explore whether its systems, capacities and practices are robust enough to deliver effective assistance with good value for money. As a performance review, it provides assurance to the Parliament and the public about whether UK aid is achieving genuine impact and value for money. The review will also contribute to the continuing development of DFID’s approach to fiduciary risk management.

Downloads Approach Paper - Achieving impact and value for money in conflict-affected environments