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Strategy Unit study on risk and uncertainty
Governments have always had a critical role in protecting their citizens from risks. But handling risk has become more central to the work of government in recent years. The key factors include: addressing difficulties in handling risks to the public; recognition of the importance of early risk identification in policy development; risk management in programmes and projects; and complex issues of risk transfer to and from the private sector.
Governments have three clear roles in managing risk. Where individuals or businesses impose risks on others, government’s role is mainly as regulator, setting the rules of the game. Where risks cannot be attributed to any specific individual or body, governments may take on a stewardship role to provide protection or mitigate the consequences. In relation to their own business, including provision of services to citizens, governments are responsible for the identification and management of risks. In each of these areas there are no wholly reliable formulae for defining risk. Governments need to make judgements in as open a way as possible about the nature of risk and how responsibilities should be allocated, recognising that there will always be some unavoidable uncertainty. Government needs to handle risks at three main levels: strategic, programme and operational. Handling of risk at all three levels has been found wanting in recent crises and policy failures, and reports by the National Audit Office (NAO) and the Public Accounts Committee (PAC) have found systematic weaknesses.
Government is already responding to the challenge of managing risks better, with a combination of specific responses to issues and generic arrangements. However, this is not yet sufficient fully to deliver benefits across the range of government’s business.
Together the factors mentioned above forced a reappraisal of how government handles risk in all its forms, and led to the Prime Minister, in July 2001, to announce the Strategy Unit (SU) study on risk and uncertainty. The study developed a broad framework for understanding risk and the report 'Risk: Improving government’s capability to handle risk and uncertainty' was published in November 2002.
Statregy Unit risk report cover
The Strategy Unit report on "Risk: Improving government's capability to handle risk and uncertainty", was published on 20 November 2002 and can be found on the Strategy Unit web site.
In his foreword to the report, the Prime Minister says:
In many ways life today is far less risky than in the past. Yet risk seems to matter more than ever, partly because we are so much more aware of the risks we face, and partly because of the sheer speed of change in science and technology. It will rarely be possible for governments to eliminate risks entirely. All life involves some risk, and any innovation brings risk as well as reward - so the priority must be to manage risks better. […] The report sets out how government should think about risk, and practical steps for managing it better. It proposes principles to guide handling and communication of risks to the public – on which we are seeking views from all interested parties. […] I see the agenda set out here as an important part of our reform strategy, and encourage all involved to play a full and active part in putting the conclusions of this report into practice.
A central recommendation in the Strategy Unit risk report was to implement a comprehensive programme of change to improve risk management across government - clearly set in the context of public sector reform. This programme builds on work already underway in departments, and has a two-year timetable to tie in with the 2004 Spending Review.
The programme is overseen by an implementation steering group - supported by a Treasury-based Risk Support team – reporting to the Civil Service Management Board, the Ministerial Committee on Public Services and Public Expenditure (PSX) and the Prime Minister . A central objective of the programme is to enable confident decision taking on risk and innovation.
Departments are responsible for taking forward most of the Strategy Unit report's recommendations – integrating responsibility for improvements with accountability for delivery - and they can look to the Treasury, the Delivery Unit, the Civil Contingency Secretariat, the Strategy Unit, and others, for support and guidance in developing their risk management capabilities. Ministers and Permanent Secretaries and their Boards are vital in leading change, in particular to help support changes in behaviour. Risk improvement managers (RIMs) in each department have been appointed to drive change within their organisation and to be part of an interdepartmental network.