Risk Management
Robe River Kuruma Aboriginal Corporation’s (RRKAC) primary source of funding is mining agreements. Mining royalty payments are held and managed by its subsidiary company, Kuruma Marthudunera Limited (KML). RRKAC and KML work closely together and have a cross-over of directors on their boards.
This governance structure facilitates communication between RRKAC and KML, which in turn allows for early risk identification and intervention. This occurred when KML identified a reliance on mining royalty payments as a significant risk to the longevity of the corporation. Payments are dependent on market factors, such as the price of minerals or cessation of mining activities. RRKAC took decisive action to improve financial sustainability and realigned direction under a new 3-year strategic plan informed by the community.
The plan focused on cost savings, expanding revenue sources and securing funds for future generations. To achieve cost savings, RRKAC and KML underwent a corporate amalgamation and restructure. This initiative saw both boards implement salary reductions and reduce the number of directors, employee redundancies, a decrease in funding to less critical member support programs and outsourcing some functions to external service providers. A full service provider review was also undertaken. To seek out business and investment opportunities RRKAC undertakes frequent macro and micro external environmental scanning. The corporation has been successful in obtaining government grant funding and increasing its Cultural Heritage Services. In addition, the RRK Future Fund was established to provide for future generations.
Tips
- Act early to manage risk
- Have the courage to make difficult decisions in the short term to improve long-term sustainability
