A Risk Imperative for Agency Leaders
Guest Post by James Kline (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
In June 2019, the Association for Federal Risk Management publish a document entitled: “Getting Ahead of Risks Before They Become Government Failures: An Imperative for Agency Leaders to Embrace Enterprise Risk Management”. The document states: “Agencies are under increasing pressure to perform their missions more effectively and efficiently, while the types of challenges that government confronts are growing more complex.
Agency leaders are expected to keep program and operations on track by getting ahead of risks before they turn into problems.” (1)
The concern is valid. There is a difficulty. The difficulty is that Enterprise Risk Management generally focuses on a methodological administrative process designed to mitigate the impact of an event on the organization. The event can be external and internal. The mitigative actions are generally administrative in nature. For instance, build an embankment to reduce flooding. Flooding is recognized as a problem. The problem is assessed and mitigative actions identified and prioritized based on available resources and expected mitigative impact.
The difficulty is that in today’s environment, with a twenty-four-hour news cycle, internal and external actions can result in reputational loss for an organization before mitigative actions can be put in place. Further, in a rush to compete with the new cycle, the mitigative actions taken can be contrary to stated goals and the ability of government organizations to perform their missions effectively and efficiently.
Today there are several issues front and center. Broadly these are:1. the psychological impact of the environment where government is seen as not functioning properly, 2. the defund the police movement, and 3. protests and Covet-19 lock down. This article explores risk assessment under extreme public pressure as it related to these three issues.
The first concern is that decisions are being made, which increase the risks to citizens and reinforces the perception of government’s dysfunction. For instance, a friend and his daughter passed through downtown Portland Oregon to get ice cream from a favorite vendor. They noted that two bridges which allow entrance to downtown Portland are closed, government office buildings have double chain linked fences around them, while private business are boarded up. The daughter mentioned she would like to get firearms training. The wife of another friend, who lives in Washington State, recently ordered a pistol which fires non-lethal projectiles.
Protests continue in Portland and at least one bridge is blocked by protesters. Thereby denying people access to the city center via that bridge. In Seattle, protesters have taken over six blocks of downtown Seattle. They took over a police station. The occupied territory is now called Capitol Hill Occupation Project (CHOP). These friends are frustrated by what is going on and scared. Government’s at all level seem unable to function properly. The perception is one of chaos and government impotence. The more deeply ingrained this perception becomes the greater the damage to governments’ reputation and legitimacy.
A second cause for concern is the defund/abolish the police cry. Let me be clear. There was no excuse for the death of Mr. Floyd. It should not have happened. Outrage at the incident is both understandable and legitimate. Every American who say the video feels the same. However, the policy demand to defund/abolish the police has risks which are contrary to the basic function of government – preservation of peace, tranquility and economic growth.
With the Minneapolis City Council voting to abolish the city’s police department. Police officers in Seattle transferring to other jurisdictions or retiring at a higher rate than the police academy can replace them. SWAT members in Buffalo New York resigning from the SWAT team, because of the way several other officers were being treated. The police chief in Atlanta Georgia resigning because of a shooting. The police chief in Portland Oregon stepping aside for a black lieutenant, because of complaints that her command staff was primarily white. The defund/abolish police force movement is having an impact on police departments and morale.
While protest focus on police departments, there seems little recognition there is a wider impact. This can be seen in the burning of the Wendy’s building in Atlanta Georgia. Fire fighters were not able to respond for half an hour. This was because police had to provide protection for the firefighters. Another example comes from Richmond Virginia, where rioters hindered police and fire units from saving a child in a burning building. “Protesters intentionally set fire to an occupied building on Broad Street. This is not the only occupied building that has been set fire to over the last two days. But they prohibited us from getting on scene.” (2)
If the number of police is reduced and there is criminal activity or a fire in a volatile or potentially volatile area, response time might be delayed. This means citizens and their property will be less safe.
Faced with a more volatile and unsafe environment individuals and families will move. In the 1970’ this trend was called “White Flight”. The race riots of the 1960’s destroyed huge swaths of cities. The affected cites saw a decline in economic value and viability. Urban decay set in. Property values plummeted. Property taxes revenue fell. As property taxes fall, so did the ability of local governments to provide services. This led to a negative spiral and the reality of dysfunctional governments.
Protests and Covid-19
The consequences of the demands for defund/abolish the police when combined with the impact of the economic lock down caused by Covid-19 creates an evil brew. This brew is evil because of the adverse impact on minority owned small businesses.
A study by Robert W. Fairlie, published by the National Bureau of Economic Research, entitled: “The Impact of Covid-19 On Small Business Owners: Evidence Of early Stage Losses From The April 2020 Current Population Survey”, detail the initial impact. It found that over all the number of small business dropped 22% from February to April 2020. By minority category, it found that Black owned businesses dropped 40%, Hispanic owned business dropped 32% and female owned business dropped 25%. (3)
The riots hurt the long-term economic health of central cities. They adversely impact minority communities more than suburban white communities. In addition, the Covid-19 lock down hurts the short term and long-term health of minority businesses. This is in addition to its health threat to all citizens.
Tragically, there appears to be no solutions coming from government. For instance, the Governor of Oregon just extended the lock down of Oregon counties for seven more days. The rationale is an increase in Covid-19 cases. An examination of the Multnomah County cases, Multnomah County the most populace county in Oregon, highlights the problem. The increased cases occurred in just two zip codes. These were 97236 and 97233. In zip code 97236 the focus of the cases was a retirement center. A fundamental question is why? It has been known, almost from the start of the pandemic, that the elderly is at greatest risk. The increase of cases in the retirement center increases the perception that both the state and Multnomah county health departments are incompetent. Zip code 97233 has been considered a hot spot for some time. Yet, no specific links have been determined. Where are the Covid-19 contact tracers? Once again, it seems the public sector organizations are failing to do their job of keeping people safe.
In addition, many political leaders, public sector administrators and medical professionals promote the continued lockdown of their economies, while supporting continual protests. This is illogical.
The premise of the lock down is that Covid-19’s health impact health impact requires such action. Further, the impact is such that opening the economy can only occur in a sequenced manner. Yet, there is no sequencing of the protests. Hundreds congregate without social distancing. Hundreds march for hours across the nation.
Covid-19 has not disappeared, yet a group of infectious disease experts at the University of Washington published an open letter. The letter was supported by over 1,000 epidemiologist, doctors, social workers, and health experts. The letter states in part that “protests against systemic racism, which fosters the disproportionate burden of Covid-19 on Black Communities and also perpetuates police violence, must be supported”.
The logic of these health professionals is hard to follow. First, the adverse impact on the Black Community of Covid-19 is primarily the result of underlying health issues. Not the racism of the virus. Second, because concern about systemic racism has been around longer than Covid-19, according the letter, the protests takes precedence over the health of citizenry and the economy. This disconnected logic and the counter factual actions of medical professionals, and public officials contributes to the perception that government is dysfunctional.
Enterprise Risk Management (ERM) is an important tool that can help government administrators get ahead of risks before they turn into problems. But ERM is limited in its application, when the polices under consideration are made in haste. ERM requires a methodical identification of both the event causing the adverse impact and the assessment of the mitigative actions. When the demand for mitigative action or the accompanying actions creates the perception of dysfunction and incompetence the organization’s reputation is damaged. The longer the perception lingers the less legitimacy the organization has. When the mitigative actions create an environment where the health and economic well-being of citizens is put in greater danger, people leave that environment. This can create a negative spiral, which moves government dysfunction from perception to reality.
- Brandt, Thomas and Bill Valdez, 2019, “Getting Ahead of Risks Before They Become Government Failures: An Imperative for Agency Leaders to Embrace Enterprise Risk Management, June, https://resources aferm.org/resources/getting-ahead-of-risks-before-they-become-government-failures-an-imperative-for-agency-leaders-to-embrace-enterprise-risk-management.
- Bashoor, Marc Chief, 2020, “Rapid Response: Firefighters describe alarming moments during riots”, May 31, https://www.firerescue.com/firefighters-safety/articles/rapid-response-firefighters-describe-alarming-moments-during-riots.
- Fairlie, Robert W., 2020, “The Impact of Covid-19 on Small Business Owners: Evidence of Early Stage Losses From The April 2020 Current Population Survey, June, Working Paper 27309, http://www.nber.org/papers/w27309.
James J. Kline is a Senior Member of ASQ, a Six Sigma Green Belt, a Manager of Quality/Organizational Excellence and a Certified Enterprise Risk Manager. He has work for federal, state and local government. He has over ten year’s supervisory and managerial experience in both the public and private sector. He has consulted on economic, quality and workforce development issues for state and local governments. He has authored numerous articles on quality in government and risk analysis. His book “Enterprise Risk Management in Government: Implementing ISO 31000:2018” is available on Amazon. He is the principle of JK Consulting. firstname.lastname@example.org