Governments falling short on risk management warns IRM chair

“The terrible (UK) flooding in Somerset and the Thames has brought into sharp focus the ‘fingers crossed’ and ‘touching wood’ approach to risk management strategy that is so often adopted by government. It is regrettable that this seems to be the default mechanism to approaching all manner of risks. It is an appalling state of affairs because we understand how to manage risk better now than we ever have in the past,” said the IRM chairman. “Since the flooding we have seen lots of frenetic activity from government officials which is unproductive and the government would be better served by seeking the advice of the increasing cadre of expert risk professionals who are largely being ignored at the moment,” he added. The recent UK flooding is the latest high profile event in Europe to bring deficiencies in government risk management into focus, but Mr Anderson believes the problem is endemic across Europe for a range of risk, with shortcomings equally prevalent at EU level.hide“Of course better risk management is not just pertinent to flood risk. It is pertinent to a whole raft of risk scenarios that may strike at any time in the future. Government needs to build its risk management capabilities so that we plan, develop information sources, reduce risk likelihood and build resilience in economically and socially viable ways,” he said. He believes that a lot of risk thinking at government level is ‘painting by numbers’ with committees simply considering whether a risk rates as red, amber or green. Worse still he fears that most risks are considered in isolation. “That is not what happens in real life: in real life as one thing hits, another does straight after, and another and another. The interdependence of multiple impact risks needs to be managed far more professionally,” he said. Put simply, Mr Anderson believes that risk management is not treated as a discipline by governments and until it is will not be taken seriously. He has therefore called for governments to employ a head of risk to take a strategic oversight on risk management. “We see heads of professions for a number of other professions within the UK government, for example, and I think risk management is sufficiently important and relevant now for governments to be taking it on board. I suspect you could argue there is political risk, which is really for politicians to deal with, but then governmental risk, which needs to be strengthened more with the appointment of a head of profession,” he told Commercial Risk Europe. This person needs to be very senior and sit either in the cabinet office or even in an independent organisation, said the IRM chairman. “I see this person as having a strategic focus because I feel risk management suffers when it delves directly down into operations without having a strategic overview. So I am talking about a senior position within government with an overview of risk management and who can bring it all together. I am not suggesting there are not some very bright and talented people carrying out risk management in government but I just don’t think it is pulled together at a senior enough level,” he explained. The head of risk would effectively manage enterprise risk in government. “There has to be a cross-cutting theme to risk management rather than keeping it silo-based. Although I have no doubt that many of the silos within government are exceptionally good at managing risk there is a clear risk that the silos might not be working effectively together. So we really are talking about someone bringing everything together, as a CRO would in a big company,” said Mr Anderson. He believes governments need to play catch up with industry in this regard and move on from managing risk at a superficial level. Mr Anderson suggests the development of risk management in government requires a more collaborative approach that demands the risk community better gets its message across. “I think we as a profession need to drive much greater awareness of risk management within governments…One problem that we are facing is that risk associations are divided in many countries. In the UK, for example, it is divided between differing camps in that we have the IRM, Alarm and other bodies. The voice of the profession actually needs to be much louder and most importantly coordinated,” he said. Speaking specifically on the UK, Mr Anderson listed a number of initiatives that alongside the appointment of a head of risk would help ensure society is better prepared to tackle future risk. These recommendations are equally pertinent to governments across Europe. He believes every government department should have a senior civil servant responsible for risk management. Risk management should be a core competency for all civil servants with training and certification to an appropriate level for their principal roles. He also urged governments to appoint a panel of experts to ensure that modern risk management thinking is effectively embedded. Furthermore, governments need to review scenario plans to ensure that the interdependence of risks is properly considered, rather than each risk being taken in isolation, he said.

Governments falling short on risk management warns IRM chair

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