Risk Management and Challenges of Managing in the Public Sector

This chapter looks at special problems facing government agencies in managing risk, compared with private‐sector organizations. Government administers many programs through third parties such as contractors, private businesses, nonprofit organizations, and state and local governments. This third‐party government can impede communications between the top of an agency and those on the front lines who actually implement the mission, and can preclude the flow of information needed for government managers to gain a good picture of major risks facing the agency and its programs. Government agencies also face unique obstacles in prioritizing the major risks they face. Most government agencies must achieve multiple, often conflicting goals; this can blur the focus that can permit a profit‐making private company to prioritize its objectives and risks effectively. Risk management is important for federal agencies and programs and is achievable once decision makers recognize the need.