When thinking about risk management it is easy and understandable to focus extensively on disasters and accidents.
When faced with risks, the challenge is how well prepared are we to overcome risks.
Risk management help prevents organizations from entering a dangerous and uncertain territory, which could lead to a catastrophic failures. It also help ensuring the development and growth of the business.
Managing risk is challenging. The processes are continuously changing and evolving in terms of resources that are available.
The business of government is becoming increasingly more complex. In the context of this growing complexity, the significance of effective risk management becomes more and more integral to effective management.
Risks can challenge the public sector’s service delivery system and growth sustainability.
In the public sector, risk management is increasingly being applied across all parts of organisations, rather than being limited to financial risks, and is taking a more structured approach.
Risk management in the public sector are aimed at enhancing governance, specifically to respond to stakeholders’ demand for better control of public resources and to focus on exploring risks existing in government’s contractual relationship.
Risk management helps government to strike a balance between preventive measures and enforcement.
Effective risk management aligns with government’s objectives and aids managerial decision-making.
Risk assessments help governments to identify and understand the root causes of risks, how to mitigate them and the players involved.
In fact, managing risk practices could lead to better project management, effective use of resources and better service delivery.
Among the internal factors that drive risk management practices in the public sector is performance measurement system, also known as the use of key performance indicators.
Performance measurement system provide crucial information for risk management practices initiatives particularly in identifying cause of risk and ensure visibility of results and control through organizational accountability.
It also provide strategic information which can be considered as resources under resource-based view, leading to competitive advantage.
The degree and variety of risks government bodies face in their daily activity is enormous and the key responsibility of these authorities is to assure the public that no current or potential risk will threat the perceived public value.
