Risk management architecture for UNDP-implemented Global Fund projects

The Global Fund supports countries in pursuing ambitious targets, resulting in a direct impact on HIV, TB, and malaria epidemics, which often include the provision of lifesaving services. Global Fund-funded projects follow very stringent donor requirements, as highlighted in this Manual. In addition, high volume, health implementation projects are high-risk for a number of very specific factors:

• Health products. Global Fund-funded projects are highly commoditized, where UNDP, as Principal Recipient, leads in the selection, quantification, procurement, storage, distribution, and quality assurance of health products. Delays in supply chains, disruption in diagnostics and treatment services, or poor quality of health products can have life threatening consequences. In addition, given the high value and marketability of these health products, risks of fraud, waste, or theft are significant.
• Complex operating environments. UNDP is nominated as Principal Recipient in countries with complex operating environments, these are often countries facing conflict, emergencies, sanctions, weak governance, or significant capacity constraints.
• Use of national systems. Due to its mandate and in line with donor’s requirements, UNDP implements these projects through existing national systems, to strengthen institutional capacities, infrastructure, health systems and processes.

To manage the risks emerging from the above systemic challenges, UNDP has established a comprehensive risk management framework to mitigate and manage the high risks associated with the implementation of the Global Fund portfolio. This framework includes:

• The Global Fund portfolio is integrated with UNDP’s umbrella Enterprise Risk Management Framework and fully aligns its implementation to UNDP’s policies, rules and regulations.
• Where nominated as Principal Recipient, UNDP utilises the Direct Implementation Modality for Global Fund grants, whereby dedicated Project Management Units (PMUs) are established within each UNDP Country Office (CO) to directly oversee and manage grant implementation.
• There is global oversight and monitoring of UNDP’s Global Fund portfolio by the Global Fund Partnership and Health Systems Team (GFPHST), in UNDP BPPS in coordination with Regional and Central Bureaus.
• UNDP COs are provided with end-to-end technical support, and comprehensive guidelines, tools and other resources by the GFPHST to effectively implement Global Fund grants.
• UNDP has centralised health procurement architecture see Health Product Management section of this Manual to provide specialised support services for the procurement, supply management and quality assurance of health products. All Global-Fund financed health products are procured centrally to mitigate the risk of health product procurement fraud, collusion, and other prohibited practices, as well as ensure the quality and minimise the safety risks.
• The Office of Audit and Investigations (OAI) has a special audit regime for the Global Fund portfolio see Audit and Investigations section of this Manual, with dedicated auditors and investigators.
• UNDP has established a special Sub-Recipient (SR) audit regime see Sub-recipient Audit Approach section of the Manual for the Global Fund portfolio, with long-term agreements established with third party audit firms to comprehensively audit SRs.
• UNDP has developed a Control Self-Assessment (CSA) methodology to enable UNDP COs to systematically assess the adequacy of controls they have in place for effective grant implementation and risk management. GF Projects can reach out to their focal point in the BPPS GFPHST if they wish to engage in a CSA exercise.
• Project level quarterly review meetings between the RRs and the GFPHST, and Regional and Central Bureau level semi-annual meetings between the Regional Bureau and the GFPHST.

This Manual is a key repository of the information and guidance on how to integrate the enhanced risk management framework within the implementation of Global Fund-funded projects where UNDP is a PR. The Risk Management section of this Manual is not a substitute for the application of POPP throughout the project cycle. This section should be read as an additional guidance to POPP, for quality and risk-informed programming.

In line with the UN Risk Management, Oversight and Accountability Model, the Three Lines model supports UNDP governance and oversight, clarifying roles and responsibilities. For UNDP Country Offices, the standard application of the model is as per Figure 6 below. Projects, including UNDP-implemented Global Fund projects provide implementation functions and as front line defence, they are outside the three lines model.

Figure 6. adaptation of the three lines of defence model in UNDP: adapted from UNDP Internal Control Framework

For Global Fund-funded projects, given the enhanced oversight and risk management framework, roles, and responsibilities within UNDP for governance and oversight are summarised in the Figure 7 below. These are aligned to the roles in project implementation and oversight in UNDP Programme and Project Management (PPM) - Provide Oversight, to ensure segregation between Global Fund project implementation (under the leadership of the Global Fund Project Manager and the PMU), project oversight by the first line (UNDP Country Office, through the Programme Team, and the Project Board) and the second line (Regional Bureaus and Central Bureaus)

Figure 7. Governance arrangements for UNDP’s Global Fund-funded projects: adapted from UNDP Provide Oversight

Global Fund also engages a Local Fund Agent (LFA) with the overall responsibility to review the capacities of the Principal Recipient (PR) to implement the project, ensure donor compliance in project implementation, and review project risks and escalate to the Global Fund. The LFA is a third-party provider contracted by the donor to provide independent review of Global Fund’s implementers performance against grant agreement and donor requirements. This function is in addition to the PR / UNDP assurance roles and standard risk management measures, as per UNDP’s rules and regulations.

Practice Pointer

For detailed responsibilities during project implementation, particularly for project management units, programme team, UNDP office management and Project Board, refer to UNDP PPM Implement – Deliver Results and the UNDP Internal Control Framework.

Detailed responsibilities and Terms of Reference of the LFA, can be found in the LFA section of the Global Fund website and in the Local Fund Agent section of this Manual.

For details, refer to the Global Fund CCM policy and UNDP PPM - Provide Oversight policy and procedures.

Additional guidance to support this area of work are also available through a number of resources listed below:

• UNDP POPP: Enterprise Risk Management policy

• UNDP POPP: Provide Oversight

• UNDP POPP: Delivery Results

• Global Fund Local Fund Agent

• Global Fund CCM policy