New development: Managing risk for better performance - not taking a risk can actually be a risk

Abstract

Taking a risk with public money has long been anathema to parliaments and the general public in any Westminster system of government with a particular emphasis on administrative and financial legislation involving administrative process and prohibition. The latter have been reinforced by associated rules, controls and regulations and subject to external oversight and investigation by treasury/finance and attorney general departments, policing bodies and audit offices, to name a few. In recent years, attention has been increasingly focused on programme outcomes and associated performance measures. This has raised the question of taking risks to achieve better outcomes. After all, this is what happens in the private sector. This question achieved a higher profile with the greater involvement of the private sector in the determination and delivery of public services. But does the public sector have the necessary insights and skills and experience to make the necessary judgements and achieve the required outcomes within a legislated framework of ethical conduct, values and public interest requirements? And is this really acceptable to governments, legislative bodies and the public?

Governments in Australia have provided variable support to, and actual involvement in, successive public sector reforms over the past 40 years. The latter’s success in implementation, not surprisingly, has been most evident when governments (and ministers) have contributed to ongoing development and implementation initiatives. The political environment was generally stable in much of the earlier decades and governments ‘enjoyed’ higher levels of public trust and confidence than they do now in a much more politically turbulent situation. A better focus on risk management in producing required outcomes would contribute significantly to better performance and to greater public support and involvement. While one would not wish to be seen as merely ‘tilting at windmills’, actual results achieved do more for public confidence than simply providing assurance about administrative decisions in spending public money, important as that is in the public context. In order for ministers (and even cabinets for particular programmes) to be involved in issues such as risk appetite and risk tolerance, they need to have confidence in the risk management policies and practices implemented in the agency/department and its governance framework. Sometimes the next step is easier than it might first appear. The impending report of the Independent Review of the Australian Public Service might be the catalyst necessary to take that step in the public interest and restore confidence in government. Show more