{"id":18386,"date":"2020-06-11T10:22:05","date_gmt":"2020-06-11T14:22:05","guid":{"rendered":"https:\/\/opsweb.wpengine.com\/?p=18386"},"modified":"2020-10-21T15:31:54","modified_gmt":"2020-10-21T19:31:54","slug":"risky-business-a-framework-for-risk-management-in-federal-government","status":"publish","type":"post","link":"https:\/\/ourpublicservice.org\/blog\/risky-business-a-framework-for-risk-management-in-federal-government\/","title":{"rendered":"Risky business: A framework for risk management in federal government"},"content":{"rendered":"\n

The federal government faces enormous risks carrying out its mission every day from addressing management challenges, such as aging IT systems, to responding to national emergencies such as the COVID-19 pandemic. Enterprise risk management helps agencies identify, prioritize and respond to these risks to improve decision-making and program outcomes in an ever-changing environment, according to a new issue brief called Mastering Risk: Ways to Advance Enterprise Risk Management Across Government<\/a>.<\/p>\n\n\n\n

Last\nmonth, the Partnership for Public Service and Deloitte held a virtual release\nevent for the issue brief, which explores progress and achievements in federal ERM and\nidentifies leading practices to make it an integral part of agency\nmanagement.<\/p>\n\n\n\n

Keynote\nspeaker Spyro Karetsos, chief risk officer at TD Ameritrade, reflected on his early\ncareer in risk management at the Federal Reserve System, where he helped launch\nthe organization\u2019s first ERM program. To attract support for and adoption of\nERM within the Federal Reserve, he connected everyday life with key risk\nconcepts, using examples such as the risk and reward involved in retirement\nplanning. These examples illustrated to agency stakeholders how the principles they\nuse to manage risk in their personal lives can translate to the agency\u2019s\nbusiness activity.<\/p>\n\n\n\n

\u201cAt the end of the day, if we could teach people that you could manage risk in your life using some technique or framework, then ultimately it doesn’t matter what type of institution you are,\u201d he said. \u201c[By encouraging this mindset,] we can have people think about managing their businesses and managing risk for the entity.\u201d<\/p>\n\n\n\n

Karetsos also\nshared his framework for weaving ERM into the fabric of an organization:<\/p>\n\n\n\n

  1. Create\na strong risk governance structure. <\/strong>A\nrisk governance structure creates the processes and mechanisms leaders use to implement,\ndirect and oversee risk management. To strengthen the effectiveness of these\nactivities, use data to determine if the risks your organization takes on are\nappropriate.<\/li>
  2. Understand\nrisk appetite, or the amount of risk an organization is willing to accept.<\/strong> Your organization should create\nrisk appetite statements that are reviewed by agency leaders every two to three\nyears to make sure they are effectively guiding the organization\u2019s work and are\naligned with the organization\u2019s strategic goals.<\/li>
  3. Monitor\nrisk level and respond when your organization is taking on too much or too\nlittle risk.<\/strong> \u201cOptimizing risk, where you’re not\ntaking too much or too little, is very essential to the elements of this\nframework,\u201d he said. \u201cAnd how do you optimize risk? Well, you determine the\nrisk appetite that you’re willing to tolerate to achieve those objectives.\u201d<\/li><\/ol>\n\n\n\n

    Read Mastering Risk: Ways to Advance Enterprise Risk Management Across Government<\/a> for additional steps leaders can consider to make ERM a critical function of agency operations.<\/p>\n\n\n\n

    Watch the full recording of the virtual release event below. <\/p>\n\n\n\n

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