BUSINESS CONTINUITY
The fi nance industry has been through a turbulent few years, but aspects of its operational risk management strategies could benefi t local government, says expertMichael Faber.
T
here has been considerable political discussion about cutting the amount
of risk in the fi nancial sector – but readers may be surprised to hear that some experts think the public sector could learn a few lessons from those in the City on opera- tional risk management.
Michael Faber, vice chairman of the Institute of Operational Risk, explained: “I have noticed whilst working on risk management standards over the last few years that there is a need generally to look upon the public sector from a private sec- tor viewpoint, more than it has been in the past.
“I gave a speech about business continuity last year where a number of public sector representatives were in attendance and it was interesting to note some potential dif- ferences in the planning levels of risk and business continuity between the public sector and the fi nance sector.
“It was a bit of an eye-opener, especially in terms of the public sector’s perceptions of technology, its availability and recovery, all of which I had tended to take for granted in the fi nance sector over the last ten to 15 years. Having said that, the investment in technology by fi nance sector fi rms, given their revenue and the importance of main- taining system availability, has driven this development in resilient technology solu- tions.”
Naturally there are distinct differences between the needs of these two sectors
– for example time criticality is crucial in the fi nance sector, whereas the public sec- tor is far more focused on service delivery. However, there is a certain amount of cross-over.
Faber told PSE: “One of the key common- alities between the public and private sec- tor in general is the need for communica- tion. Whether it be in crisis management or any other area when business continuity is required, communication is absolutely key. This is because it is not simply how quickly an organisation recovers an op- eration which is ultimately important – it is about how that organisation responds through communication to any affected parties.
“This is one of the biggest commonalities and one of the most critical.”
Whilst the fi nance sector undoubtedly has a very strong approach towards the man- agement of risk in regards to the technol- ogy it uses, won’t managers in the public sector be understandably hesitant to take advice from it, given the events of the last few years?
“Undoubtedly,” says Faber. “I think that the fi nance sector has been – to say the least – tainted in regards to its perceived approach towards risk management. As a result of that, there are some potentially good aspects of risk management present within the fi nance sector, which will not be viewed positively, because they have, in ef- fect, been tarred with the same brush.
“This means that many within the public sector will not want to look to the fi nance sector for advice because they will only consider the sector’s recent performance, which will lead to them overlooking some really great risk management innovations.
“The public sector should be open to the idea of learning from the mistakes of other sectors as well as from their own. Both the private and public sector organisations will often complete a ‘lessons learned’ ex- ercise at the end of a major project or inci- dent, in theory to ensure that mistakes are not repeated. Why not use elements of the scenario that affected the fi nancial crisis, but carry it out in a public sector context, to identify any overlaps? Once improve- ments are identifi ed from this or any other lessons learned exercise they should then be seen through to completion and not forgotten after simply completing the ex- ercise.”
Only time will tell whether the fi nance sec- tor can implement appropriate solutions to prevent history repeating itself, but hope- fully with a sharing of good practices in risk management across both public and pri- vate sectors alike, the likelihood of realising positive outcomes and maintaining a good overall service will be increased.
Michael Faber
FOR MORE INFORMATION Visit
www.ior-institute.org
public sector executive Mar/Apr 11 | 55
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