Our political leaders make ambitious commitments to the community in the lead up to elections, and after they win they rightly expect the public sector to deliver.
Those of us on the hook for delivering these programs are acutely aware of the risks in large scale reform and the high stakes involved in delivering.
One of the greatest challenges I’ve faced as a senior executive in the public sector is getting people to take enough risks to get big things done. When I have an ambitious program to deliver, I can’t afford for people to operate within their comfort zone.
If I had a dollar for every time a staff member told me it was too risky to change something, I wouldn’t have to wait until I was 54 and 11 months to retire.
But as JFK once said “There are risks and costs to action. But they are far less than the long range risks of comfortable inaction”.
My organisation has an important mandate to connect up healthcare so that the right information is available to the right person, at the right time. This reform has the potential to halve medication mishaps, reduce hospitalisation for people living with chronic conditions, and eliminate costs of duplicate tests.
And it’s risky. Increasing the reliance on information and IT in healthcare can create new points of failure. New things can go wrong, and in a medical context the consequences can be severe.
To balance our perspective on risk and return, we learned from organisations that are innovating their risk approaches. We observed 3 common practices:
1. Risk management isn’t a ‘framework’
Innovative organisations don’t view risk management as a ‘framework’, but as a lens on what level of risk they need to take to deliver their strategic objectives. The output isn’t a risk register, it’s an increased appetite to take calculated risks and manage potential consequences.
2. Every management decision is underpinned by an understanding of ‘acceptable’ risk
Formally defining a risk appetite embeds risk taking into corporate culture. It articulates the level of risk we’re comfortable taking, and aligns everyone’s risk tolerance. The right level of risk taking then becomes part of the organisation’s DNA.
3. Risk controls span more parts of the organisation than you think
Risks are managed by a management plan (we’re all familiar with this) but also a range of other controls; corporate structure, resource allocation, legal contracts, insurance, and cash reserves. Seeing controls holistically gives an executive comfort that a risky decision is moderated on many levels.
When properly applied, these techniques stimulate risk taking inherent in reform and creates a culture where people are not punished for taking acceptable risks.
Big government programs can be hard work, especially if your Department is risk averse. But anyone involved in government reforms knows it is highly rewarding as the results have a major impact on peoples’ lives. This alone is motivation enough to want to see a program succeed.
Bettina McMahon will be speaking on ‘Risk based approaches to deregulation’ at the upcoming Measuring & Managing Strategic Risk in Government Conference. Book by June 26th to save $300 on ticket prices.