The Global Fund Guidelines on Financial Risk Management

The Global Fund Guidelines on Financial Risk Management

1 Executive summary
1.1 Introduction and purpose
1. The objective of the Global Fund is to achieve impact against the three diseases through
investing donor funds in well managed and well performing programs. In order to achieve
this objective, the Global Fund has the following 4 core principles:
a. Country Ownership – the countries in which funds are invested determine their own
solutions to fighting the three diseases and take full responsibility for ensuring the
implementation of these solutions in light of their own political, socio-cultural and
epidemiological context.
b. Partnership – governments, civil society, and communities living with the diseases,
technical partners and the private sector are involved in the decision-making process
and collaborate in the implementation of programs funded by the Global Fund.
c. Performance-based funding – continued funding is dependent upon the
demonstration of proven results.
d. Transparency –The Global Fund is fully committed to transparency and this is
reflected in all of its work. The Global Fund is a signatory to and actively participates
in the International Aid Transparency Initiative.
2. In adopting these principles, the Global Fund relies on the ability of implementers in
countries to provide effective financial management policies and procedures to manage
risks related to:
a. Flow of Funds arrangement
b. Internal Controls
c. Financial Fraud, corruption and theft
d. Accounting and Financial Reporting
e. Value for money
f. Auditing arrangements
3. These Financial Risk Management Guidelines should be considered together with the
following Global Fund documents:
 Risk Management Policy
 OPN on Risk Management across the Grant Lifecycle
 Risk and Assurance Framework
 Operational Risk Framework
 Operational Policy Note on Additional Safeguard Policy
 The Global Fund accountability framework
 Procurement Regulations and Procedures
 The Finance Specialist Handbook
 Guidelines for Grant Budgeting and Annual Financial Reporting
 Guidelines for Annual Audits of Global Fund Grant Program Financial
Statements
4. The Global Fund Risk Management Policy specifies that the primary responsibility for risk
management for the Secretariat rests with the management and other staff of the several
divisions and departments that jointly form the Country Teams. It also identifies “risk 

owners” within the Secretariat, which is further defined in the Operational Policy Note
(OPN) on Risk Management.
5. This Operational Policy Note states that the Risk Owners are responsible for providing
technical guidance in their functional area regarding risk identification and prioritization,
best practices for mitigants based on country context, and assurance planning options and
follow-up actions.
6. Where risk and capacity assessments and further assurance findings suggest that risks are
not effectively managed and hence that there are issues relating to the financial
management of the grant then the Finance Specialist
together with the Fund Portfolio
Manager from the Country Team will need to develop, appropriate risk mitigation
measures. This should be done in collaboration with the implementing entity.
7. This document establishes guidance for Finance Specialists and subsequently to
implementers on the Global Fund’s approach to mitigating financial risks within grants.
The guidance addresses the following:
a. Clearer understanding of the financial risks that need to be assessed and how these
assessments should drive changes in financial risk management at the implementer
level;
b. The roles and the responsibilities of the different stakeholders involved in the financial
risk management at the Global Fund by providing an accountability matrix;
c. Clarified policy for Finance Specialists and implementers on what financial risk
identification tools and mitigation measures are available and how and when they
should be used. The guidance will consider the risk mitigation measures that the Global
Fund can suggest at the level of the Principal Recipient (“PR’), although
implementation of the measures may also be at the Sub-Recipient (“SR”) level.
d. Consistent application and monitoring of financial risk mitigation measures. Ensuring
that Country Teams monitor and assess regularly the impact of these measures on the
financial risks of the grant together with the overall performance of the grants;
e. Better engagement with stakeholders on:
- Explaining the reasons why financial risk mitigation measures are put in place;
- Understanding of how the measures will be used and commitment to building the
risk mitigation into the underlying control framework of the implementers;
- How the effectiveness of the risk mitigation measures will be monitored and
assessed.
8. The guidelines are not intended to impose any obligations, additional to those in the grant
agreement or in the contract with the relevant Agent. In case of any conflict between the
provisions set out in the relevant grant agreement and/or in the contract with the relevant
Agent and these guidelines, the specific clauses of the grant agreement and/or in the
contract with the relevant Agent shall take precedence.

The Global Fund Guidelines on Financial Risk Management