Councils' develop their RMPs using their own processes, though they may consult with other councils or receive expert advice including from MAV. There are several key components to an RMP that need to be in place for it to provide a defence under the RM Act:

In addition to the key pieces of legislation and policy identified in the audit context, additional legislation and policy covers and informs local government insurable risk practices and insurance.

We have consulted with DELWP, MAV, Ballarat, Benalla, Glen Eira, Kingston, Pyrenees, Stonnington and Yarra, and we considered their views when reaching our audit conclusions. As required by section 16(3) of the Audit Act 1994, we gave a draft copy of this report, or relevant extracts, to those agencies and asked for their submissions and comments. We also provided a copy of the report to the Department of Premier and Cabinet.

Responsibility for the accuracy, fairness and balance of those comments rests solely with the agency head.

In this part of the report, we examine how councils decide what insurance cover they require, and ensure they achieve a value-for-money outcome. We focus on:

Identifying and mitigating risk is an important way a council can manage insurance claims against it.

There are 79 councils in Victoria, including 31 metropolitan and 48 rural and regional councils. At 30 June 2017, Victorian councils controlled $91.2 billion of community assets, such as roads, bridges, drains, town halls, libraries, recreation facilities, parks and gardens. Collectively, they received $10.5 billion in revenue against $8.1 billion worth of expenditure on programs and infrastructure, as shown in Figure 1A. Local councils in Victoria employ over 30 000 people.

Figure 1A
Victorian local government profile

As part of their service delivery role, Victoria's councils carry a range of risks across their significant assets and operations. At 30 June 2017, Victoria's councils controlled $91.2 billion of community assets, employed over 30 000 people and received $10.5 billion in revenue against $8.1 billion of expenditure across their programs and infrastructure spend.

Councils need to identify, mitigate and, where appropriate, transfer any risks associated with their assets and operations. Councils purchase insurance as a form of risk transfer against a range of unforeseen losses.