Governments worldwide must adopt better risk management, EY says

A recent EY report has identified the top 10 public sector risks for 2025, which has spurred the firm to push for integrated risk management.

EY global leaders advised that “business as usual” was no longer a viable option given the financial pressures and economic uncertainty governments and people were continuously faced with.

“In an era defined by unprecedented disruption and evolving public expectations, the foremost challenge for government and public sector leaders is to navigate the rapidly changing risk landscape without compromising service delivery or fiscal responsibility,” EY said.

EY global government and infrastructure leader Catherine Friday said government and public sector organisations would need to make a series of difficult and potentially unpalatable trade-offs necessary to mitigate risk and prevent larger crises down the line.

“One such trade-off might be restraining fiscal policy to address mounting public debt or loosening fiscal policy to ease cost-of-living concerns,” she said.

“Another might be balancing the need to recruit new green businesses and investment with potential environmental, public health and other community concerns. Whatever the option, there will always be a cost. Yet, choosing the easy way out by delaying hard choices sets a course to a more precarious future.”

The report highlighted the window of opportunity was “rapidly closing” and the need for change was not a novel concept for government and public sector leaders.

Maintaining the status quo, Friday said, would exacerbate existing issues and therefore widespread change was crucial.

The report also said disruption would likely persist and become more interconnected in the foreseeable future as many of the identified risks were likely to intersect and impact one another.

The fusing of risks would likely compound the complexity of both governing and the challenge of implementing resilient change, according to Friday.

EY predicted an increase in transactional decision making across the globe this year, which could potentially dismantle international agreements, alliances and norms which would add to economic instability.

Friday said these disruptions, if not effectively addressed and/or mitigated, could undermine public resilience and erode trust in government.

“With a deep sense of mistrust and dissatisfaction pervading many societies, the ability to manage and risk effectively isn’t just necessary, it is a chance to build public trust and restore confidence,” she said.

“It is also a real opportunity for governments to prove to a sceptical public that proactive governance isn’t only possible, but also provides tangible benefits. By investing in integrated risk management systems, public sector organisations can become more agile and responsive.”

Public sector leaders, regardless of rank, should continually evaluate risks on the horizon and engage stakeholders in and outside their organisation to effectively adapt and respond.

“In a world that is dominated by uncertainty, demonstrating an ability to anticipate and act upon global risks and public needs has never been more urgent and it is also an opportunity to win back public trust,” Friday said.

“Government and public sector leaders who take this opportunity can foster greater societal resilience despite ongoing change and shape the future with confidence.”