We need more cooperation in risk management

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NAOF and the Finnish Risk Management Association (SRHY) arranged the seminar ‘Towards dynamic risk management’ on 7 February. The event was held in Pikkuparlamentti in Helsinki and it attracted nearly 70 risk-management experts from the private and public sectors.

According to SRHY’s executive director Lassi Väisänen, there are similarities between risk management in the public and private sectors.

“Both sectors are influenced by the same megatrends. For example, we should share methodological competence and continue discussions on risk management,” Väisänen explained.

Auditor General Tytti Yli-Viikari noted that the audit sector is in a state of transition.

“We are already doing tasks that did not even exist 10-15 years ago. This means that there is a great need for competence development in the sector.”

We should be able to identify the unknown

According to Sami Yläoutinen, who works as an economic policy coordinator in the Ministry of Finance, one country is hit by two crises every quarter century. On average, the realisation of such unexpected risks costs the country six per cent of its GDP. For this reason, it is important that we prepare for disruptions occurring in normal conditions.

“The most serious threats involve issues that we are not even able to identify. Our aim should be to make these unknown threats known,” Yläoutinen said.

The Ministry of Finance produces a risk report each year and it is working to make information more transparent and easily available.

“As a whole, Finland’s general government finances are well managed. We have an effective spending limits system and there is strong political commitment to ensuring that the system works,” Yläoutinen explained.

Incorporating the risk-management perspective into decision-making

In an audit carried out last year, NAOF noted that government agencies are not adequately prepared for disruptions occurring in normal conditions. Furthermore, the risks are no longer agency-specific but of inter-administrative nature.

“In a changed world, even an effective agency-level risk and continuity management function is not enough and it is not possible or economically practicable for individual agencies to manage risks,” noted Juha Niemelä, Principal Performance Auditor at NAOF.

In fact, NAOF has recommended that the need for making risk and continuity management into a Government-level or an administrative branch-level function should be examined in a Government-coordinated review.

“It is important that NAOF highlights the risk-management perspective in decision-making,” said Vesa Koivunen.

In fact, in a committee report published on 21 February, Parliament called for the Government to take immediate action to improve risk management in central government and to determine the division of responsibilities in the area.