Discover analytical tools and practices to help improve the quality of risk management in government organizations Federal agencies increasingly recognize the importance of active risk management to help ensure that they can carry out their missions. High impact events, once thought to occur only rarely, now occur with surprising frequency. Managing Risk in Government Agencies and Programs provides insight into the increasingly critical role of effective risk management, while offering analytical tools and promising practices that can help improve the quality of risk management in government organizations.
- Includes chapters that contribute to the knowledge of government executives and managers who want to establish or implement risk management, and especially Enterprise Risk Management (ERM), in their agencies
- Features chapters written by federal risk managers, public administration practitioners, and scholars
Showing government officials how to improve their organization's risk management capabilities, Managing Risk in Government Agencies and Programs meets a growing demand from federal departments and agencies that find themselves increasingly embarrassed by risky events that raise questions about their ability to carry out their missions.
Table of Contents:
Foreword xv
Preface xvii
PART One
Introduction and Overview
CHAPTER 1
Managing Risk of Federal Agencies and Their Programs through Enterprise Risk Management 3
Thomas H. Stanton
Risk Management as an Essential Part of Federal Management 3
Risk Management as an Integral Part of Good Decision Making 5
The Unique Challenges of Managing a Government Agency 6
Establishing Effective Risk Management 8
Managing Risk in Government Agencies: Overview of the Book 11
References 16
CHAPTER 2
The Need for Effective Risk Management 17
Douglas W. Webster
Defining Risk 18
The Source of Uncertainty: Change 20
Risk and Reward 22
The Risk Management Process 23
The Essence of Organizational Success: Stakeholder Value 29
The Role of Information Technology in Risk Management 31
The Importance of Organizational Change Management 31
Putting It All Together 32
Conclusion 33
References 34
CHAPTER 3
Introduction to Risk Management for Government Managers 35
Thomas H. Stanton
Fitting Risk Management into an Organization 36
Promising Practices in Risk Management 45
Observations about Risk Management in Government: What Works and What Doesn’t 54
Conclusion 60
References 60
CHAPTER 4
Risk Management and Challenges of Managing in the Public Sector 63
Paul L. Posner,Thomas H. Stanton
Unique Risk Management Challenges of Public Programs 65
Third-Party Governance: The Challenge of Managing Risk across Organizational Boundaries 68
Goal Setting, Accountability, and Prioritization of Risks 77
Concluding Observations 81
References 83
CHAPTER 5
Creating and Keeping Your Options Open—It’s Fundamental 87
Brian Barnier
The Real World Is Rarely Simple and Stable 87
Systems Set the Stage 88
Managing More Easily—Options in Time 89
Examples of Options in Time in Practice 95
Conclusion 110
Key Points 111
References 111
PART Two
Moving toward Enterprise Risk Management
CHAPTER 6
Introduction to Enterprise Risk Management for Government Managers 115
Douglas W. Webster
Shortcomings of Traditional Risk Management 116
The Impact of Managing Risk within Silos—a Case Study 119
The Maturation of Traditional Risk Management into Enterprise Risk Management 121
Key Principles of Enterprise Risk Management 126
What Enterprise Risk Management Is Not 129
The Payoff 133
Summary 134
References 136
CHAPTER 7
Implementation of Enterprise Risk Management at the Office of Federal Student Aid of the U.S. Department of Education 137
Fred Anderson, Cynthia Jaspers Vitters
Overview of FSA 138
Initial Implementation of ERM at FSA 140
Initial Activities and Challenges in Implementing Enterprise Risk Management at FSA 142
Expanding the ERM Program—a Change in FSA’s Business Model 144
Key Considerations and Challenges When Implementing the Expanded ERM Program at FSA 148
Conclusion 158
References 159
Acknowledgments 160
CHAPTER 8
Integrating Enterprise Risk Management with Strategic Planning and Resource Management 161
Jeffrey Stagnitti
Context 161
Enterprise Risk Management and Strategy 167
Enterprise Risk Management and Resource Management 170
Conclusion 172
CHAPTER 9
Building Enterprise Risk Management into Agency Processes and Culture 175
John Fraser
Building a Shared Understanding of Risks through Conversations 177
The Key Enterprise Risk Management Techniques 184
Improved Decision Making and Prioritization 188
Conclusion 191
References 192
For Further Reading 192
Appendix: Hydro One Inc. Enterprise Risk Management Policy 193
PART Three
Special Topics in Risk Management and Response
CHAPTER 10
Risk Management and the Dynamics of Budget Cuts 199
Thomas H. Stanton
The Dynamics of Protracted Budget Controversy and the Risk and Uncertainty They Create 200
Long-Term Budget Cuts and the Risks They Create 203
The Role of Risk Management in Reducing Chances of a Major Mishap 207
Strengthening Agencies’ Ability to Deal Effectively with Budget Pressures 215
Conclusion 217
References 217
CHAPTER 11
Managing Reputational Risk 219
Gary L. Glickman
What Is Reputational Risk and What Does It Mean to Government? 221
What Determines Reputation and How Can Government Address These Factors? 223
External Influences on Reputation 229
Consequences of Reputational Loss for Government Organizations 231
Reputational Risk Mitigation 235
Conclusion 239
References 240
CHAPTER 12
Risk Management and Decision Making: Lessons from the Financial Crisis for Federal Managers 243
Thomas H. Stanton
The Financial Crisis: How It Emerged, What Happened, and the Costs 245
Decision Making at Firms That Failed: Common Shortcomings 248
Decision Making at Firms That Succeeded: The Importance of Culture 252
Lessons in Governance, Risk Management, and Decision Making 258
Conclusion 264
References 265
PART Four
Conclusion
CHAPTER 13
Effective Enterprise Risk Management: Mapping the Path Forward 269
Douglas Webster
Recommendations 270
Conclusion 290
References 291
For Further Information 292
For Further Reading 292
About the Editors 293
About the Contributors 295
Index 299
About the Author :
THOMAS H. STANTON teaches at Johns Hopkins University. He is President-Elect of the Association of Federal Enterprise Risk Management (AFERM) and a Fellow of the National Academy of Public Administration. Mr. Stanton is a former member of the Federal Senior Executive Service. He holds a Bachelor of Arts degree from the University of CaliforniaDavis, a Master of Arts from Yale University, and a Juris Doctor from Harvard Law School and has written extensively on governance and risk management in the financial crisis.
DOUGLAS W. WEBSTER is the Founder and President of the Cambio Consulting Group, LLC, and co-founder and past President of the Association of Federal Enterprise Risk Management (AFERM). He served as Chief Financial Officer of the U.S. Department of Labor in 20082009 and has 20 years of experience consulting to over two dozen federal and state agencies. Dr. Webster received a Bachelor of Science in Engineering from the University of CaliforniaLos Angeles, a Master of Science in Systems Management from the University of Southern California, and a Doctorate in Business Administration from United States International University.
