Risk Leadership

In January 2007, PRIMO Danmark launched their national guide on (public) risk management Risikoledelse – En Kommunal Opgave. The guide was endorsed by the Danish Minister of Interior, Lars Løkke Rasmussen, who wrote the preface to the guide.

“Every day, local authority managers make decisions involving risks; that is, decisions involving significant uncertainty. It is important to note that these may be risks facing citizens, local communities or the local authority organisation itself.

Risk is simply a condition of life when the future is uncertain. To put it in another way: making important decisions on an uncertain foundation is also part of overall management. Executives can never be entirely certain about the foundations of their decisions. However, if entirely risk-proof decisions were possible, nothing would happen. So, for executives, the whole secret is – in the words of Kierkegaard – to take upon one self this uncertainty. Executives in the public sector should, therefore, work systematically on minimizing the negative sides of risks and on maximising the positive sides.

The task of dealing with risks in society in general has, so far, been carried out reasonably well. From a historical perspective, the world – not to mention the average Danish municipality – has by no means become a more uncertain or risky place to live. To the contrary: we live longer, we live healthier lives and we have prospects of fewer losses of human lives and assets than ever before.

When we, nevertheless, see a need to focus on public executives’ ability to handle uncertainty, this is due to a number of essential changes of the conditions under which this management is carried out. It is not just a question of a more globalised world, or of a higher degree of complexity in the production of services and the exercise of public authority. And, it is not just a question of an increasingly larger body of laws and regulations, nor just a question of the rapid technological developments and of the many opposing pressures from an increasing number of stakeholders with whom today’s executives need to deal. It is not least a question of the public’s very explicit and legitimate expectations that the authorities manage the part of our daily lives, for which they today – to a considerable extent – are responsible.

This leaves executives with an equally legitimate claim on having decision support; and a systemised decision support for dealing with uncertainties is exactly what risk leadership is about.

By working with corporate governance, the private sector has attempted to meet today’s expectations of good corporate governance from the public and from politicians as well as from national and international requirements and regulations. From the very start, risk management has been recognised as an integral part of corporate governance in international codes of conduct as well as in the (for example) Danish Nørby Report.

I would argue that…

… the public sector as well should include risk management as a natural part of good public governance.

To earn the citizens trust everyday places a heavy responsibility on local authority top executives. Of course, public executives and organisations cannot guarantee certainty and progress. However, they can assist citizens, local communities and private enterprises in handling the risks which are connected with safeguarding the welfare of society now and in the future in a more thoughtful, yet also more proactive, way. Instead of letting ourselves be governed by fear, we should face the future in an intelligent way.”

This article has been published in Public Risk Forum, Edition May 2007.

Read more in Public Risk: About Values in our Society