Councils often fail to evaluate and manage risks in a structured and formalised way, the Audit Commission has found.

The recent commission's management paper, “Worth the Risk: Improving Risk Management in Local Government”, provided practical advice to councils on how to address key business risks.

The commission said the way councils dealt with risk could have a major impact on whether they achieved their key strategic objectives.

To remedy this situation, the commission's paper recommended councillors took a lead in establishing good risk management, that risk management was embedded in existing processes and not seen as a one-off event and that authorities became pragmatic and recognised that risk management did not eliminate risk.

Commission controller Andrew Foster said successful risk management could make a council more flexible and responsive to new pressures and external demands.

“It allows an authority to be better able to meet the needs and expectations of its community,” he said.