On June 22, the Department for Local Government, the Association of Local Government Executive Secretaries and the Association of Local Councils organised a joint conference on "Risk Management in the Public Sector". The conference was addressed by Maltese and foreign specialists in the field, and its main aim was to instill risk management as an essential part of good 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 formalised 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.
In a local context, had Government carried out professional risk assessments within certain of its departments and authorities, perhaps it would have been spared the embarrassment caused by the recent corruption scandals.
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:
• embedding risk handling in all decision processes;
• establishing new risk management techniques;
• creating the organisational structure and responsibilities;
• 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.
The conference and the launch of PRIMO Malta is an important step in that direction and it is hoped that it will cause a sea-change in the way that decisions are taken by both the elective and the executive.
PRIMO Malta is a chapter of PRIMO Europe, which was created by UDITE - the Union of Local Authority Chief Executives of Europe - with the aim of making risk management an essential part of good management. Since its inception in 2005, PRIMO Europe has developed rapidly with chapters in Denmark, France, The Netherlands, Belgium and now also in Malta - a network which offers its members a comprehensive Web library, guidance and counselling, as well as an introductory online course in risk management.
John O'Dea is chairman of PRIMO Malta, board member and treasurer of PRIMO Europe, treasurer of UDITE and vice-president of the Association of Executive Secretaries of Local Councils, Malta.