Public sector lacks risk awareness for commercial projects

New research conducted by Zurich Municipal has found that 49 per cent of risk professionals at public sector organisations feel that they and their colleagues have sufficient risk awareness when managing commercial projects.

This is despite 93 per cent of those responding in the research stating that their organisations engage in commercial activities in order to generate income, most commonly through investments in commercial property and in professional services, such as accountancy, financial planning and legal services.

The research, which was carried out among members of the ALARM risk management organisation, found that only 24 per cent believed that their organisations made decisions in these areas with a full understanding of the risk implications. A large majority said that their primary reason for engaging in commercial initiatives was to close the funding gap and pressures to maintain services on reduced budgets.

In contrast to this, 59 per cent of those questioned believe that commercial activity to generate income has led to greater innovation, while 68 per cent agreed that it better enabled their organisation to fund the services they provide their communities.

Rod Penman, head of Public Services at Zurich Municipal, said: “The uplift we are seeing public sector engagement with commercial initiatives marks a momentous shift in what is now required from organisations serving the public. Innovation and greater financial independence are two extremely encouraging by-products of this trend that should be celebrated, but leaders in the sector must not forget that where there is opportunity, there is also great responsibility and risk. To safeguard the future of public finance and services, there is a real need to ensure the appropriate risk management measures are in place to avoid walking blindly into trouble.”