Risk Management is More Important Than Ever
Since the election of President Trump, a great deal of discussion has ensued regarding the potential impact of the new Administration on our nation as the policy priorities of the White House change. In the first two weeks of his term, the President has moved aggressively to implement key elements of his agenda as expected. However, there is a distinctive difference in the tone and approach of the new Administration, in comparison to previous Presidential transitions. This difference, often decried by politicians and the media, creates an extremely high level of risk and uncertainty both domestically and internationally. Under the new Administration, risk management is more important than ever, and potentially more difficult.
Simply stated, risk is just the amount of uncertainty on achieving objectives and goals. Although it is not possible to predict the future, in many instances it is possible to assess the likelihood of an event occurring and take actions in response. In other instances, the level of uncertainty or lack of information makes it nearly impossible to assess the likelihood of an outcome making it exceedingly difficult to manage that risk. Both these situations are present in the internal and external environment that shapes the risk context for the federal government. This risk context changes with every new Presidential Administration, but has arguably altered more suddenly and dramatically for the federal government than in recent history. The new context introduces new risks, alters the likelihood or impacts of existing risks, and creates potential new opportunities.
The Office of Management and Budget Circular A-123 released in July 2016, provides a good framework for federal departments and agencies to begin to understand and adjust to the new risk context. As noted by OMB, “effective risk management needs to give full consideration to the context in which the organization functions and to the risk aspects of partner organizations”. Risk must be managed within today’s context which is introducing new risks as the strategy of federal department and agencies changes. The new context will also amplify the consequences of any internal risks that impact the organization’s ability to execute its mission irrespective of their strategy. Government entities that neglect establishing or re-establishing the risk context will be unable to effectively identify, assess, and respond to the risks in this new environment.
The policies and priorities of the new Administration will assuredly drive shifts in how and where the federal government aligns its limited resources and focuses its energies. Federal government leaders will face tough choices regarding how to best use the resources at their disposal to accomplish their missions and implement new White House policies. Organizations with ineffective risk management programs will be at a disadvantage in justifying their resource needs and managing the risks that could hinder achieving policy and program objectives. They will also be at a disadvantage in understanding and pursuing new opportunities presented by the new Administration that can enable their mission goals and objectives.