A global survey of finance professionals and others working in the public sector has shown a key part of the global economy is wrestling with significant risks – while not always having the tools to cope.
Top risks facing public sector organisations are financial challenges and an inability to meet changing demands and expectations of the public for services. ACCA, the leading global finance professional body, has released new survey data from members to assess the current challenges.
The research, drawing on responses from those working in a range of roles across the public sector – finance, risk, audit and service delivery – found that, for their own organisations, they were worried about funding for public services and the ability to meet the evolving demands of delivering services, as well as finding the people with the right talent and skills.
In ACCA’s survey, the following five risks were highlighted as the most significant risks facing respondents’ organisations (percentage figures represent the proportion of respondents identifying the risk as one of their ‘top three’)
● Financial challenges – 49%
● Meeting changing demands and expectations – 35%
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By GlobalData● Talent and skills deficit – 35%
● Poor organisational culture – 28%
● Ineffective leadership – 26%.
Respondents were also asked to identify the most significant risks facing the public sector in general; the following were the five most cited risks (percentage figures represent the proportion of respondents identifying the risk as one of their ‘top three’).
● Fraud and corruption – 42%
● Ability to finance services – 40%
● Talent and skills deficit – 37%
● Inflation/recession – 34%
● Meeting changing demands and expectations – 34%.
In response to the challenges facing the public sector, ACCA’s new guide ‘Calculated Risk’ makes the case for finance professionals taking a leading role in the risk management process.
Despite the skills finance professionals possess, the survey showed that many public sector organisations are not making effective use of their capabilities in risk management. For
example, only just over half of respondents (55%) who work in the finance function said they were regularly involved in identifying and reviewing relevant operational risks.
Organisations must ensure finance professionals are at the heart of managing risk and building resilience in the public sector. The finance function is often well-placed to recognise risks across the organisation, identifying connections between them.
Those in finance roles are experienced at working in collaboration with other teams within their organisation, as well as developing partnerships between organisations. Supporting decision-makers by modelling scenarios and identifying costs and benefits associated with different options for addressing risks should be a core part of a finance professional’s role.
Commenting on this, ACCA senior subject manager for the public sector, Mark Johnson, said: “Some public sector organisations are neglecting the valuable insight of staff working on the frontline. Identifying risk is a two-way process: organisations need to be made aware of any risks that are not already formally identified, and those working in services are often in the best place to identify such risks. Using the knowledge and expertise of staff working in each part of an organisation to build up a profile of risk is critical for a comprehensive understanding of risk.”
In an era where the outlook for public finances is challenging the public sector needs to move away from business as usual if it is to successfully negotiate the significant risks it faces. Ultimately resilience in organisation is built by developing skills and capabilities. Public sector finance professionals who understand the threats and opportunities posed by risk can help build more resilient public services
