Strategic Risk Management in the Municipal and Public Sector: An Exploration of Critical Success Factors and Barriers to Strategic Risk Management within the Province of Newfoundland and Labrador

Cooper, Thomas (2010) Strategic Risk Management in the Municipal and Public Sector: An Exploration of Critical Success Factors and Barriers to Strategic Risk Management within the Province of Newfoundland and Labrador. Project Report. The Harris Centre, St. John's, Newfoundland and Labrador.

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Abstract

As more organizations are focusing on systemic and controllable business risks, as well as Enterprise Risk Management (ERM), a question emerges as to how this fits within a public sector organization managing its strategic objectives. Moreover, how does a public sector organization manage ‘strategic risks’? It is unclear from the literature exactly what constitutes strategic risk or how it is managed by organizations. This prompts the need for a common understanding of strategic risk within the domain of the public sector. From a regional policy development perspective, public sector organizations in the province of Newfoundland and Labrador will be facing substantial risks in the coming years in how to best allocate resources emerging from natural resources royalties as well as understanding the twin factors of a declining birth rate and out-migration. Should resources be invested in municipal governments that cannot be economically and administratively sustainable? What are the risks in not managing the potential ‘windfall’ from oil and gas revenue? Moreover, what should the role of public sector managers at both the municipal and provincial levels be in addressing these risk questions? Using content analysis and semi-structured interviews, we use a mixed methodology approach to explore the question of barriers and key success factors of strategic risk management within municipal governments and the public sector. Specifically our research collates information on public sector risk management while addressing the practice of public sector strategic risk management through a series of semi-structured interviews and content analysis of municipal plans. Finally, we explored the potential barriers and key success factors to addressing strategic risk management in the province of Newfoundland and Labrador. Findings included a wide range of risks being identified in the municipal plans within the province`s municipal plans. It is noted that there were some specific barriers to municipal strategic risk management including the state of municipal planning documents, lack of clear implementation plans and an apparent non-identification of flood risk. Two major themes emerged, the importance of risk culture and methodologies as well as risk management processes and models. We believe these two major themes have significant implications on public sector risk management as well as for researchers in this area. We conclude that this is an area that needs further research including understanding how risk management varies across different public sector activities. We found that risk decisions and organizational cultures are complex processes and systems. The need for a common methodology and approach to address risk management at all levels of the public sector is noted. Other recommendations emerging from the research include better risk identification, the use of third parties in assisting the development of municipal plans and dealing with specific risks that are relevant to the province of Newfoundland and Labrador including flood and economic risks. Examining public sector risk management is an opportunity for researchers as well as the university. Better understanding and management of strategic risk can lead to more effective strategy development and planning ultimately leading to the betterment of communities and the province.

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