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/ Canadian Government Executive
// May 2016
T
he actions and decisions of pub-
lic servants have consequences
for the reputation of their de-
partment, and the confidence of
Canadians in the government’s ability to
deliver on its commitments. Not surpris-
ingly, they are cautious and often take
precautions to ensure that many risks are
mitigated to a point as close as possible to
zero.
This risk-averse culture often results in
increased costs, less timely action or re-
duced output for government operations.
This article identifies some of the under-
lying factors leading to this culture and
offers some solutions. The authors inter-
viewed six senior managers at the deputy
minister and assistant deputy minister
levels in the public service of Canada to
discover what drives risk aversion in the
public sector and how oversight bodies
can help.
The first factor identified was policy.
There is a common misconception among
public service managers that all policies
are designed to control risks, whereas some
policies are driven by political needs. Deci-
sions are often made, especially for inter-
nal operations, to ensure that policies are
respected to the letter despite operational
realities. Senior managers interviewed
indicated that they are often faced with
situations where the best course of action
requires decisions that can sometimes go
against established policy requirements.
This is an important factor.
The need to increase controls and thus
take less risk can also be driven by a reac-
tion to an event. In cases where a depart-
ment had just experienced a failure in their
program delivery or received a negative
audit, managers may overreact by imple-
menting controls to directly address the
symptoms identified instead of making ef-
forts to identify and address the underly-
Internal Audit
Greg
Nesbitt
Louis
Seabrooke
Giving Realistic Advice
onManaging Risk
ing risk drivers leading to these events.
Given all of the factors that managers
must consider when making decisions, it
can be a challenge for managers to under-
stand what is expected in either accepting
or mitigating identified risk. Two broad ap-
proaches were identified in our interviews.
The first was in using Risk management
tools and processes. Although some de-
partments have made significant progress
in this area, there is still a lack of funda-
mental risk management tools and pro-
cesses in place to identify, understand,
assess and mitigate risks. There is also a
lack of understanding that no two risks
have the same level of tolerance, and that
tolerance levels change over time. Risk tol-
erance discussions need to be held at key
governance committees to develop a com-
mon understanding of the current context
facing a department, including ministerial
direction, public environment, or resource
or operational constraints.
The second was in judging where op-
erational risk outweighed compliance risk.
Sometimes, non-compliance to certain
administrative policies is acceptable. One
of the most compelling examples in this
regard would be the need to protect the
health and safety of Canadians. It is our
opinion that if timely actions were needed