Senior Management Dropping the Risk Management Ball

In the research published by Datasouth Corporate Services into the risk management practices of NZ local government organisations this week, a common theme emerged. Obtaining senior management buy-in.

But why? Here we are in 2007. Our business and economic landscape is characterised by Globalisation, Commoditisation, Modularisation, Connectivity, Client Sophistication, Transparency and Governance (ask us about the 7 mega trends of professional practice). As a result public companies, the finance sector, and government organisations alike are all well aware of the need to run a tight ship when it comes to risk management within the governance framework. Surely the rise of ERM is proof of this . . .

Yet here we are, once again, pondering the dis-interest of senior management to such a critical management discipline, and in organisations central to our community well-being. Similar findings were made in a 2006 survey of NSW local governments.

Much has been written of the importance of 'corporate culture' in context of risk management. But culture is a leadership issue. Can it be said then that we have a fundamental leadership failing in local government on both sides of the Tasman? Perhaps it is more a case of the risk management disciplines still being relatively immature in the "acceptance cycle". Many however, would argue that such a defence expired some time ago. After all, the AS/NZS:4360 standard is one of the best in the world (it is being internationalised at the time of writing), and the related handbook for local government is six years old.

Still, this problem persists. It will be interesting upon the release of each of our annual reports, to see how this issue trends over the next five years . . .