On the 22nd of June 2007 John O’Dea, chairman, brought forward at the launch of PRIMO Malta his view on the added value of entreprise wide risk management in the public sector: “Risks are simply a fact of life when the future is uncertain and making important decisions on an uncertain foundation is part and parcel of what management is all about. The secret is to take on and manage this uncertainty.”
Conference PRIMO Malta, Speech John O’Dea, president, 22nd June 2007, Malta
“On behalf of PRIMO Europe, The Department for Local Government, The Association of Local Government Executive Secretaries and the Association of Local Councils, it is my privilege to welcome you to the conference on Risk Management in the Public Sector.
Risk Management is as old as Methuselah. Although there are no records in the book of Genesis that indicate that Adam and Eve carried out a risk assessment, their world and ours might have been a different place had they given it some thought.
The world might also have been a different place had the developed nations – with their reputedly state of the art management tools – applied them with the base integrity assumed in any formalized risk management process. We might have avoided or at least mitigated the shocks of BSE, bird flu, environmental change, 9/11 and other recent and not so recent crises that have reshaped the world that we live in.
Government and by extension the public sector is perhaps best characterised as avoiding risk and adopting a bastion mentality that has delayed acceptance and implementation of new processes and technology that ultimately strangled performance. We have a fragmented, unnecessarily differentiated and inconsistent approach to management in the public sector. This results in gaps, overlaps and lack of an institution wide analysis which unnecessarily reduces our public sector institution’s effectiveness and exposes it to considerable reputational risk.
In this context, Government has three roles: As a regulator of others who create risk, as a steward of risks not attributed to others and as a manager of the risks arising from its own services.
We need to develop a new approach to public sector management of risk by:
1. Embedding risk handling in all decision processes.
2. Establishing new risk management techniques.
3. Creating the organizational structure and responsibilities
4. Creating a comprehensive quality standard
The main strength of enterprise wide risk management (EWRM) is that it forces underlying assumptions out into the open, where they can be explicitly challenged. It also enables management to make better decisions based on calculated risks. It enhances communication, and transparency, more reflection of public values and concerns, more information about risks and responses – all aimed at winning back public trust in public institutions, which has been in decline during the past few years.
EWRM offers the possibility of a broad buy-in by all stakeholders, including the political, the executive, the administrative, and the public and focuses on accountability and best practice.
Every day, Directors, Managers and CEOs in the public sector make and execute decisions involving risks – decisions involving elements of considerable uncertainty, affecting the lives of the public, communities and the country as a whole.
Risks are simply a fact of life when the future is uncertain and making important decisions on an uncertain foundation is part and parcel of what management is all about. The secret is to take on and manage this uncertainty.
This conference and the launch of PRIMO Malta is an important step in that direction.”