AUTHOR=Andersen Torben J. , Young Peter C. 

TITLE=Enhancing public sector enterprise risk management through interactive information processing

JOURNAL=Frontiers in Research Metrics and Analytics

VOLUME=Volume 8 - 2023

YEAR=2023

URL=https://www.frontiersin.org/journals/research-metrics-and-analytics/articles/10.3389/frma.2023.1239447

DOI=10.3389/frma.2023.1239447

ISSN=2504-0537

ABSTRACT=Federal agencies are increasingly expected to adopt enterprise risk management (ERM). However, public sector ERM applications have typically focused on the economic efficiency of tax-financed activities based on control-based practices. This reflects an emphasis on quantifiable concerns that invariably directs attention to risk, that (by definition) relates to identifiable and measurable events, thereby downplaying uncertain and unknown aspects of public exposures. This is a potentially serious shortcoming as government entities often act as society’s risk managers of last resort. When extreme events happen what were previously considered private matters can quickly turn into public obligations. Hence, there is a need for proactive assessments of the evolving public risk landscape to discern unpredictable—even unknowable—developments. 
This demands a cognitive shift in current thinking from a primary focus on risk to also appraise complexity and uncertain conditions where data-driven methods can uncover emergent exposures from dynamic information processing. Backed by theoretical rationales and empirical evidence, the article explains how the value of ERM can be enhanced when it intertwines with local responsive initiatives and central strategic risk analyses. It can form a dynamic adaptive risk management process where insights from dispersed actors inform updated risk analyses based on local autonomy and open exchange of information using digital technologies to generate a collective intelligence for strategic decision-making. This approach builds on specific structural features embedded in culture-driven aspirations to generate collaborative solutions. Its functional mode is an interactive control system with open discussions across levels and functions in contrast to conventional diagnostic controls that monitor predetermined key performance indicators (KPIs) and key risk indicators (KRIs). This requires strategic risk leaders that recognize the significance of complex public exposures with many unknowns and a willingness to adopt digitalized information processing rooted in a collaborative organizational climate.
The article evaluates current applications of ERM in public risk management and highlights a paucity of efforts to consider uncertain and unknowable dimensions in complex public exposures. It develops the theoretical and empirical foundations for interactive information processing in a dynamic adaptive risk management approach that incorporates digitized methods to solicit collective intelligence for strategic risk updating.