City management in the perspective of ‘risk’
Jack P. Kruf | 2007
In this article, I want to focus on the specific characteristics of the role and position of local authority CEOs and city managers in relation to the three worlds of politics, society, and management. A specific focus on the role of risk management in supporting the CEO and the process of discussing these issues should be made to emphasise that risk management belongs on the strategic agenda and demands a holistic approach.
The “best” job
Some might say it is the most attractive and fascinating job there is: serving as CEO in local public management (or city manager or secretary). Why? Because it is at the very heart of dynamic society, close to politics and government, at the centre of the world of “power and influence”, and at the top of the management pyramid. This person is at the junction of necessary skills, ambitions, rights, stakes, and interests. He or she is, via society, close to disasters, successes, poverty, and environmental challenges, and, via politics, to elected officials like the mayor and local alderman, but always in close contact with officials in higher government and very close to the professionals in within the organisation. Local government leadership is a very exciting job.
“It is clear that risk management should be seen as a core competence for every public leader.”
The CEO is a generalist, not a specialist. One might say that a realistic comparison of the job would be with the decathlon. As with decathletes, the CEO must be well-rounded, competitive and competent in many areas.
Furthermore, the CEO cannot operate in isolation but has to be open to the world, always authentic, and able to act like a chameleon. A phrase that has always appealed to me is being able to walk the web as a spider and be familiar with the rules of chess. This broad spectrum makes the role challenging, very attractive, and influential, but also very vulnerable. And it is here where risk management comes into play.
Risk management
As the demands of the city manager job are diverse but inter-connected, so must be the management approach: the manager must possess a broad, non-panicky and non-dogmatic perspective on risk and risk management – one which stresses usability in relation to a wide range of public risk issues, as well as to risks in public organisations.
Such an approach requires a holistic, opportunistic and dialogue-oriented form of risk management, which seeks to harvest the value added, the ethical, resilient, and innovative potential in risk management as a natural part of public governance.
Managing risks is among the most challenging issues for the public sector today. Whether risks arise from the physical environment, economic environment, or even from changes in voter preferences, public institutions are responsible for assessing and addressing the risks that impact the community they serve and their organisation. For example, what risks are possible when investing in a new IT system? Which risk elements are to be analysed when decisions about building a new school are made? Which risk elements are to be assessed to prevent vandalism and break-ins on municipal buildings? And which risks emerge from decisions made by higher governmental institutions?
Risk management should be seen as a core competence for every public leader. But what is risk management? Generally, it is a way of approaching business, a sound attitude towards and style in managing people, projects, processing, and reaching goals. It comprises tools and techniques but, more than that, a smart, honest, and externally oriented approach that is open and authentic. Risk management leads to an effective and efficient way of reaching goals. It is the road to success. Let me focus on the three domains; society, politics and management.
“One of the major goals for the public sector worldwide is a continuous building and rebuilding of public trust in close combination with sustainable development.”
The three worlds
The worlds of society, politics, and management always overlap and are connected. This fact requires a new risk management approach. It should consist of more than just preventing losses and reducing costs. Increasingly, risk management can be defined as the coordinated management of all risks. In this regard, modern risk management is a general management function that permeates an organisation, is linked to the organisation’s overall strategic plan and enables the achievement of political and organisational goals and objectives.
One of the major goals for the public sector worldwide is the continuous building and rebuilding of public trust in close combination with sustainable development. Risk management is thus a most valuable management concept and tool in today’s complex and globalised world with increasing demands on governance and compliance.
Risks in society
The attacks on the World Trade and the Madrid trains, the Indian Ocean tsunami, the financial scandals of Enron and Worldcom, increasing poverty, climate change, increasing problems in the supply of clean water, unexpected riots in the suburbs of our cities, the murder of a Dutch politician, the Danish cartoon controversy, and the massacre at Virginia Tech University – all tell us how fragile society is. This underlines the urgency of and demands the control of risks, not only on a global but certainly also on a local level.
Risk management requires knowledge of what is happening in society and how it develops in our streets, neighbourhoods, villages, suburbs, and cities. Knowing requires measuring and monitoring stress, satisfaction, trust, and safety; that is, perceptions of risk as well as objective and factual measures of risk. Monitoring and diagnosing society is important. Understanding relevant trends and developments is critical.
Risk management also asks us to understand how and to what extent institutions in society really cooperate, where they should and why they don’t. This chain of interrelated institutions should be working if we want to be in control. Only the right information can lead to the right conclusions and the right things to do. So, sensing society and its institutions is a form of risk management.
Of course, we receive some social feedback from citizens during elections. But I believe we need to develop a more consistent and permanent way of monitoring and sensing the state or health of society and its risks. This will contribute to an overall improvement in the quality of federal and local policies. If set up internationally, which it should be, it will lead to more exchange of knowledge and experience between local authorities worldwide.
Risks in politics
The CEO’s task is to advise his local politicians as effectively as possible to prevent and protect them from risks. This boundary between politics and management requires special attention. Politicians often have a different view of risks than specialists and professionals. The approach here is to invest in the awareness of risks and to put it on the common strategic agenda. This seems so easy, but actually, it is not. Politicians and managers do not always speak each other’s language. On the other hand, the local government is an entity committed to developing policies and legislation by politicians on a regional, national and European level. Yes, there is the fact these are sometimes difficult to implement or, if so, against high costs and with intense efforts from municipal organisations.
Risk management compels us to consciously calculate the risks and bring them forward. National organisations should play a key role in this. In my view, we should invest in partnerships between the different governmental layers. The other approach is to share your experiences in implementation and synchronisation and cooperate in this as much as possible. In the long term, higher levels of government should involve lower levels of government in policy development and implementation. The best form of risk management is a true partnership.
Another factor that local government has to deal with is the lack of cooperation on a higher level. Central governmental institutions and ministries are organised by sector: traffic, environment, agriculture, economic, social, legal, et cetera. An integrated approach to specific areas, projects, problems, target groups, and even individuals is often literally blocked by this compartmentalisation. And this fact itself leads to higher risks for “control” of society. For example, the result is inconsistent legislation that may even be contradictory at the local level.
“Mind you, another factor that local government has to deal with is the lack of cooperation on a higher level.”
Introducing risk management here implies bridging the gap between the government’s compartmentalised nature and the need for integration, which is truly a challenge for the city manager, generalist, process engineer, chameleon, or spider, as he or she may be.
However, reducing the risks of a noncongruent and consistent approach on a local level caused by compartmentalisation is often very difficult and frequently impossible. Most power and influence, laws, regulations, and project budgeting are organised along such sectoral lines. This causes high risks for society. Bridging those gaps may be one of the highest forms of risk management.
In general, it is very clear that a broader approach to risk management can lead to successful projects and policies and, from there, to successful local politics and politicians. While this seems obvious, it has not always been that way. Indeed, risk management is often seen as an obstacle to political goals and ambitions. I would simply argue here that risk management enables the fulfilment of goals, and if it isn’t happening in an organisation, risk management is not being effectively practised.
“Introducing risk management here implies bridging the gap between the compartmentalised nature of government and the need for integration…”
Risks in management
The CEO is, in general, responsible for the management of the municipal organisation. Every manager has to be perfectly in control and, therefore, be able to realise the political targets. In this, the CEO, along with the mayor and alderman, is also responsible for the mistakes/faults of the local organisation. In this context, risk management has much to do with minimising errors, mistakes and accidents. Preventing crises and disasters and, if they occur, doing the right things.
Another factor is that good news always travels fast to the top, but the bad news often stays hidden. Most employees never enter the executive room to tell the top manager that a decision is risky and will lead to trouble. This would be, as they say, not a good career move. That is why it should be the CEO who puts risk management high on the strategic agenda as an invitation and a request to employees in the organisation to come forward. Beyond that, he or she has to develop a safe and open culture for employees to discuss risks and, more importantly, reduce them. Most CEOs today delegate directly to others. But it is my opinion that this is a risk in itself. Risk management requires the involvement of all management team members, and it requires that they all explicitly share the risks.
Another important aspect of the job of the CEO is realising political targets. This demands a management style focused on results. Defining the goals and auditing the risks of not realising them can give an enormous stimulus to develop and focus employees on those results. This is a risk management pursuit and can assure success and improved control. In this regard, the CEO needs to be open and transparent in his approach to facing risks. In my view, the process of reducing risks and uncertainties is often too implicit, sometimes even hidden and not visible.
To prevent the organisation itself from approaching risks sectorally, it is worthwhile considering the “bundling” of control in the organisation in one place, of course, with the checks and balances embedded and incorporated. Legal, IT, financial and quality officers often don’t talk with each other because they have their own specialisms. The city manager also has to develop an integrated approach, as it will improve the quality of political advising, address the needs of society and foster higher-quality decisions.
The necessity of sharing
In my judgment, all preceding comments underscore the importance of sharing—that is, sharing ideas, techniques, and strategies among public sector managers. For reasons that escape me, we do not see the level of sharing (between local authorities, between local and central governments, and – yes – between governments of various nations). But sharing is necessary, in significant part because of globalisation. We can learn a lot more if we are prepared to look around us and learn from each other, as well as share our experiences and approaches.
A new visionary and comprehensive risk management organisation for public risk management on a CEO level has been set up to encourage and facilitate the goal of sharing. It is called the Public Risk Management Organisation (PRIMO). It is an international association that strives to establish an influential transnational network for creating awareness, setting up networks, connecting people, and developing and disseminating well-founded, solid, useful, and cutting-edge knowledge on public risk management for the benefit of society, the citizens, and the public organisations.
Just get started
Risk management has a good scientific basis, though it is relatively young in the public sector. However, there are sufficient tools and techniques available to start. Put risk management high on the strategic agenda. Start the debate about the most experienced risks, and create a safe atmosphere and culture where it is possible to share and bring risks forward. Identifying the risks is a start in itself and the first step in reducing risks and uncertainties on projects, advising, and processes. And I want to underscore this final point; it has to be the city manager who sets the example and leads the way.
PRIMO Res Publica 