Municipal governments face many of the same risks as private sector businesses—and then some. While all businesses exist to increase revenue and profits, the public sector must serve the public interest as well. Therefore, due to their specialized operations, public sector agencies also face some unique challenges in risk management.
How Risk Management in Local Government Differs From the Private Sector
Local government agencies provide many of the public services mandated by federal and state governments. These include emergency services, public healthcare, law enforcement, public education, mass transit, and more.
Risk managers understand that these offerings can expose the agency to risk that requires mitigation, and unlike private businesses, a municipality can’t simply not perform a public function to avoid the risk that work poses.
Moreover, the priorities of a municipality can change with every new election. One administration might focus on improving infrastructure and law enforcement reform, while the next works on improvements to public education and community development projects. That constant change poses its own risk management challenges.
Ultimately, the success of a local government is determined by how satisfied its constituents are with the provision of government services. In addition, local governments are responsible for restoring government services after an outage or disaster.
These risks, plus the reality that municipalities operate with tight budgets and limited human resources, can make risk management within the public sector to be particularly challenging.
What risks do local governments face?
Just like their corporate counterparts, risk managers in the public sector must assess and prioritize the risks their municipalities face. Typically the highest priorities involve public safety, financial stability, and since the arrival of the pandemic, public health.
According to the S&P Global Outlook, the top risks facing local governments revolve around:
- The timing and magnitude of possible federal support for local governments.
- Vaccine distribution and a coordinated federal approach to slowing the spread of COVID-19.
- Uneven public health recovery from the pandemic.
- Reliance on short-term solutions to address long-term pressures (say, funding pension obligations with property tax revenue).
- Fiscal pressure at the state level which trickles down to the local level.
- Housing market strength, unemployment, retail and commercial recovery after 2020 shutdowns.
- Incoming federal policy around immigration, the pandemic, the economy, tax, and infrastructure from a new federal administration.
- Low interest rates, which can lead to bubbles in local home prices.
Modern Risk Management Strategies for Local Governments
Cybercriminals understand perfectly well the pressure local governments face, and that limited budgets can result in lax risk management strategies. They carefully analyze municipal IT infrastructures to find vulnerabilities they can exploit.
The cost of a single breach can run into the millions and poison the public’s faith in local officials. Therefore it’s critical that local governments make the best use of their financial resources, and supply themselves with the proper tools to analyze risk and address the most severe vulnerabilities first.
Here are just a few strategies that can help local governments modernize their risk management strategies.
Create a positive risk culture.
To protect themselves against the constant onslaught of cyber crime, local governments must create a positive risk culture to minimize exposure. To do this, they must clearly define and communicate risk appetite and management strategies with employees and stakeholders to assure everyone incorporates these strategies into their daily routines.
Use risk compliance standards to ensure a strong risk posture.
Multiple compliance standards for governance in the public sector exist, and can provide a risk management framework capable of withstanding a cybersecurity incident or data breach. These include, but are not limited to, NIST and FedRAMP compliance frameworks.
Eliminate manual processes and outdated risk management practices.
Many local governments still use manual processes and outdated methods such as spreadsheets to manage risk. These methods simply aren’t able to meet the demands of public governance in the digital age. They can be rife with human error and lack the transparency needed to make quick decisions and resolve immediate risks.
Automate your risk management framework.
Therefore, implement a risk management solution that can automate much of the manual risk management tasks and provide a single, central platform to understand risk stance, assess new risks, and manage ongoing mitigation programs.
Finally, local government agencies must conserve financial resources while continuing to improve decision making. Again, a strategic risk management solution that automates much of the process and eliminates the bottlenecks of manual operations is the quickest way to ensure both a strong risk posture and improve financial stability.
How ZenGRC Can Improve Risk Management for Local Governments
With ZenGRC, you can leverage one platform for all your loss control, compliance preparedness, risk, governance, and policy management needs. ZenGRC provides your business with a single, integrated experience that reveals all risk across your business.
ZenGRC simplifies internal audits and preparation for external auditing with complete views of control environments, easy access to information necessary for program evaluation, and continual compliance monitoring to address critical tasks at any time.
Worry-free public sector governance is the Zen way! Learn more by scheduling a free demo today.