Risk Management: Standard 4.3

Standard

Risks to VET students, staff and the RTO are identified and managed.

Performance Indicators

The RTO demonstrates:

1. it identifies, manages and reviews risks to VET students, staff and the RTO 
2. it manages financial risks to the organisation, including by maintaining a financial plan and appropriate monitoring and oversight of the RTO’s financial position, financial performance and cashflows
3. a system for identifying, managing and disclosing (as relevant) real or apparent conflicts of interest
4. where the RTO offers training or assessment to VET students aged under 18, risks to their safety and wellbeing are identified and managed consistent with principles for child safe organisations, having regard to the training content and mode(s) of delivery.

Intent of Standard 4.3

Risk management is vital for ensuring high-quality VET, promoting a stable and supportive environment for students and staff and safeguarding the RTO’s interests.

Effective risk management:

• helps RTOs ensure adherence to regulatory requirements and standards
• ensures the quality and integrity of VET outcomes
• helps protect student safety and wellbeing and creates a secure and supportive learning environment, enhancing student satisfaction and retention
• helps prevent disruptions to training and administrative functions, ensuring smooth and continuous operations, including in the face of unforeseen events
• protects the RTO’s reputation, fostering trust and confidence among students, staff and stakeholders
• supports financial sustainability and resource allocation, avoiding financial crises and ensuring long-term viability.

This standard requires RTOs to have a risk management system that is focused on identifying, managing and reviewing risks to students, staff and the RTO. Within the standard, some specific areas are called out. This includes management of:

Financial risks to the organisation

• By monitoring and managing cash flow and financial performance, this mitigates the risk that the RTO will not be able to sustain operations, which can disrupt the provision of training and assessment to students and potentially threaten the capacity of the organisation to refund any prepaid fees to students.
• Governing persons should be involved in reviewing the financial plan and be regularly informed about the financial position and forecasts of the RTO, including how the position impacts the delivery of training and assessment in accordance with the Standards.

Conflicts of interest

• RTOs should have a system for identifying, recording and managing actual and perceived conflicts of interest. Governing persons, staff and others should be supported to understand the importance of effective conflict management and how to apply the RTO’s system for conflict management.
• Effective management of conflicts of interest helps:
  • preserve the integrity of the RTOs’ decisions and actions and promotes fairness and objectivity
  • reduces the risk of fraudulent activities and corruption by ensuring transparency and accountability in the RTO’s operations
  • helps protect the RTO from scandals and reputational damage, which can have long-term negative impacts on an RTO’s credibility and success
  • fosters a culture of honesty, transparency and ethical behaviour, contributing to a positive and collaborative working environment

Risks to the safety and well-being of VET students aged under 18

• The principles of child-safe organisations in Australia are designed to ensure the safety and wellbeing of children and young people within organisations. These principles are guided by the National Principles for Child Safe Organisations, which provide a framework for creating child-safe environments.
  • RTOs that enrol young people are expected to apply the 10 National Principles for Child Safe Organisations:
  • Child safety and wellbeing is embedded in organisational leadership, governance and culture.
  • Children and young people are informed about their rights, participate in decisions affecting them and are taken seriously.
  • Families and communities are informed and involved in promoting child safety and wellbeing.
  • Equity is upheld and diverse needs respected in policy and practice.
  • People working with children and young people are suitable and supported to reflect child safety and wellbeing values in practice.
  • Processes to respond to complaints and concerns are child focused.
  • Staff and volunteers are equipped with the knowledge, skills and awareness to keep children and young people safe through ongoing education and training.
  • Physical and online environments promote safety and wellbeing while minimising the opportunity for children and young people to be harmed.
  • Implementation of the national child safe principles is regularly reviewed and improved.
  • Policies and procedures document how the organisation is safe for children and young people.

When designing a risk management system, RTOs should consider the context within which they operate and the risks that are most relevant to them and their students. This will be informed by strategic planning, environment scanning, relevant data and feedback from students, staff and others.

Self-Assurance Considerations

In self-assuring against this Standard, consider (among other things):

• how you identify the key risks to your RTO, students and your continued compliance with the Standards
• how you determine the most appropriate risk mitigation strategies for identified risks
• how you review the effectiveness of your risk management system
• what is in place to address financial risks and conflicts of interest What is in place to address risks to young students regardless of where training and assessment is delivered

Standard 4.3 – Reflective Questions

In considering the reflective questions, consider the extent to which your current practices are working and what if any, changes you could make to improve these. It may be helpful to think about examples.

1. What practices do you use to understand the risks associated with your RTO, students and on-going compliance?
2.  How will you manage risks identified in question 1 above?
3. How do you monitor the RTO’s financial position and ensure governing persons are aware of (and managing) financial risks?
4. How do you ensure staff, and third parties are aware of the types of conflicts of interest that need to be disclosed and how these are to be documented and managed?
5. If you deliver to students under the age of 18, what practices do you have in place to embed the principles of child safe organisations?

Additional Resources

Webinar

Creating a Child Safe Organisation by WACOSS  - This webinar address key topics under the Governance Quality Area of Risk Management 4.3(d).

Documents

• 10 National Principles - Department for Communities 
• Poster 10 National Principles - Department for Communities 
• Reportable Conduct Scheme - Ombudsman WA
• Resources by WACOSS - Western Australian Council of Social Service (WACOSS)
• Self-assessment and review tool - Commissioner for Children and Young People 
• Introductory self-assessment tool – National Office for Child Safety (available in multiple languages) 

Websites

• Child Safe Organisations Information for Organisations and Community Service - Department for Communities 
• Video Taking Care of Yourself on Vimeo Australian Childhood Foundation 
• Understanding the National Principles Australian Human Rights Commission – understanding and talking about the National Principles with children and organisations.
• Child Safe Organisations WA Guidelines – Commissioner for Children and Young People 
• Tips for Implementing the National Principles – Commissioner for Children and Young People 
• Reportable Conduct Scheme - Ombudsman WA

Related Standards

Standard

• Standard 1.8 - facilities, resources and equipment
• Standard 2.5 - diversity and inclusion
• Standard 2.6 - wellbeing
• Standard 2.7 - feedback, complaints and appeals
• Standard 2.8 - feedback, complaints and appeals
• Standard 4.4 - continuous improvement

Compliance Requirement

• 1 - information management requirements
• 17 & 18 - prepaid fees
• 19 - public liability insurance
• 20 - compliance with other requirements

Other

• National Principles for Child Safe Organisations
• Reportable Conduct Scheme