London Underground and the Department will need to follow good practice in risk management in dealing with the risk of developments relating to the PPPs that may increase central government liabilities. They should ensure that their risk management plans and processes include the full cycle of proactive activities: risk identification, evaluation of the probability and impact of risks, risk mitigation, monitoring and review.5 LUL currently has arrangements in place for identifying and mitigating risks, particularly arising from PFI/PPP interfaces.
| The Department should avoid a complete "hands off" approach to oversight, while recognising that the partners must have freedom to deliver their responsibilities under the contract. (Report reference: B4) |
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5 See previous NAO reports such as Risk Management: The Nuclear Liabilities of British Energy, HC 264, Session 2003-04, 6 February 2004, and Risk Management Assessment Framework, HM Treasury, June 2003.