Reshaping Public Sector (Enterprise) Risk Management

Abstract

Public sector entities are increasingly encouraged to implement enterprise risk management (ERM) to streamline procedures, create efficiencies, and safeguard delivery of public services. But, the ERM practices–as applied–adopt a confined concept of risk that subdues uncertain and unknown aspects of complex and (potentially) vast public exposures. We suggest that the management of uncertainty as opposed to risk–particularly in the public sector–requires different leadership approaches, organizing structures, and strategic response capabilities. It is argued that public institutions pursue distinctly different purposes and face unique challenges compared to commercial enterprise, which makes wholesale applications of ERM difficult in public sector entities. So, adoption of ERM in public settings requires a significant modification to the approach. This effort can take inspiration from strategic risk leadership in dealing with the complexity of public exposures vying for long-term solutions for society where successful outcomes are measured as sustainable resilience.