Finance professionals should take lead on public sector risk management in era of great challenges

by Admin | July 19, 2023

The research, drawing on responses from those working in a range of roles across the public sector – finance, risk, audit and service delivery – found that, for their own organisations, they were worried about funding for public services and the ability to meet the evolving demands of delivering services, as well as finding the people with the right talent and skills.

In ACCA’s survey the following five risks were highlighted as the most significant risks facing respondents’ organisations (percentage figures represent the proportion of respondents identifying the risk as one of their ‘top three’):

• Financial challenges – 49%
• Meeting changing demands and expectations for services – 35%
• Talent and skills deficit – 35%
• Poor organisational culture – 28%
• Ineffective leadership – 26%.

In response to the challenges facing the public sector, ACCA’s new guide Calculated Risk makes the case for finance professionals taking a leading role in the risk management process. Despite the skills finance professionals possess, the survey showed that many public sector organisations are not making effective use of their capabilities in risk management. For example, only just over half of respondents (55%) who work in the finance function said they were regularly involved in identifying and reviewing relevant operational risks.

Mark Johnson, ACCA senior subject manager for the public sector, said: ‘Some public sector organisations are neglecting the valuable insight of staff working on the frontline. Identifying risk is a two-way process: organisations need to be made aware of any risks that are not already formally identified and those working in services are often in the best place to identify such risks. Using the knowledge and expertise of staff working in each part of an organisation to build up a profile of risk is critical for a comprehensive understanding of risk.’

In an era where the outlook for public finances is challenging the public sector needs to move away from business as usual if it is to successfully negotiate the significant risks it faces. The finance function is well-placed to recognise risks across the organisation and support leaders in addressing these risks. Ultimately resilience in organisation is built by developing skills and capabilities. Public sector finance professionals who understand the threats and opportunities posed by risk can help build more resilient public services.