5 Risk Management Challenges for Public Entities in Today’s Economy

By Mary Stewart | February 8, 2009

Local governments increased their commitment to risk management over the past decade, as they met the challenges posed by several major natural disaster and terrorism events. Better local government loss prevention, crisis management and risk communication resulted. We now face a more prolonged, national disaster: a major economic downturn.

This latest disaster threatens to erode, rather than strengthen, local government risk management. Risk management must demonstrate its centrality to the government’s mission and find ways to succeed with fewer resources.

A key attribute of a strong risk management program is vision; the ability to anticipate and address emerging risk prior to a critical event. The following are a few difficult risk issues that public sector should think about in the coming year:

  1. Increased Demand for Services. One predictable outcome of an economic downturn is increased criminal activity. Another is an increased need for social services. The government must evaluate whether it has sufficient capacity to handle the increased responsibility.

    Are the courts able to handle an increase in their case load?

    Will sheriffs and police officers become more involved in non-core activities, such as foreclosures/evictions or increased domestic disturbances?

    Can the jails accommodate an increase in population?

    Will non-sworn personnel (police aides, volunteers) be used to enforce codes/laws?

    Will unmarked cars be used to transport arrested persons and on other official business, due to a lack of marked police cruisers?

    Do social services agencies have the resources to provide added assistance to families in trouble?

  2. Privacy Concerns. As local law enforcement agencies work with Homeland Security to protect against terrorist attacks, there may be more claims alleging breach of privacy.

    Have law enforcement policies been updated to reflect privacy issues under federal/state laws? Has the agency created special units to handle cyber crimes and to protect information related to those crimes?

  3. Using Technology to Address Risk Issues. Technology is an important tool for addressing many societal risk issues, including disasters, dwindling natural resources, and homeland security. But it must be used with care to avoid negative consequences.

    Will government be liable if the technology fails to achieve its purpose or causes damage?

    Will technology providers require liability protection in exchange for participation in efforts to manage societal risk? (Examples are telecommunications and vaccine providers.)

  4. Public Health Emergencies. Local governments are closely involved in managing public health emergencies, such as pandemic illness or bioterrorism. They must know in advance the extent of their legal authority to quarantine individuals, close schools and public gathering places, shut down transportation, and take other steps to reduce the spread of communicable illness. To the extent possible, plans should be shared in advance with all government employees.

    Will mandatory quarantines or business closures result in lawsuits?

    How will emergency responders be protected from infection?

    Will the government be responsible for the safety and actions of volunteers who assist with care of the ill?

    How will the jail manage a pandemic that threatens the incarcerated population?

  5. Benchmarking and Performance Measurement. Benchmarking and performance measurement help risk management demonstrate its value by providing quantitative evidence to support its priorities, decisions, programs and results.

    Share documents, procedures and ideas with other governments to promote better performance.

    Use cost/benefit analysis and measurements to identify areas with high frequencies or severe claims.

    Maintain regular communication with a group of governments (peer group) that are similar to your organization.

Join PERI’s Data Exchange to gain state/ national comparison.

About Mary Stewart

Stewart is director of research and development, Public Entity Risk Institute (PERI), Fairfax, Virginia, www.peri.org.

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