Towards a holistic approach
Finn Kjaer Jensen | February 2007
It certainly is true that governments have practiced risk management, in a general sense of the term, for thousands of years. Ancient cities that built walls to keep out invaders were practicing an elementary (but sound) form of risk management. Indeed, risk management is a fundamental purpose of government – government is, to a considerable degree, risk management. Further, there are numerous activities in the public sector that can be characterized as risk management (immunization programs, defense policy), but which are entwined with other functions of government.
The Categories of Public Sector Risk Management
To better appreciate the historical process that has led to the present risk management environment, it is useful to first understand the general framework of risk management in the public sector.
As an interesting point of reference, the UK central government (the Cabinet Office’s Strategy Unit) issued a statement in 2002 that characterized public sector risk management as possessing three facets 1) managerial, 2) regulatory, and 3) stewardship. These facets reflected the fact that risk management sometimes was a direct part of the management of public institutions, but that often it involved less direct activities – for example, regulating the behavior of other private and public organisations and influencing other sectors or taking a leadership role to address public concerns beyond the reach of an individual public entity. The main focus of this article is on the “managerial” domain. This facet of public risk management is known as ORM (Organisation Risk Management, or, with increasing frequency, ERM or Enterprise Risk Management).
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