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Bureaucracy stands in way of ERM in the public sector

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Public sector entities are lagging their private sector counterparts when it comes to enterprise risk management, according to speakers at the Risk & Insurance Management Society Inc.'s annual conference this week in San Diego.

The practice of incorporating enterprise risk management across an organization to create better outcomes has become a mainstay among private firms, yet public entities — facing a multitude of organizational challenges that include government bureaucracies and stricter regulations — tend to silo risk management away from everyday business, said David Dolnick, San Diego-based risk manager for The Brady Cos., a construction firm, at a session on emerging best practices in risk management.

“The farther you get from the source of the data, the less reliable the information,” he said. “Greater specialization only leads to blindness.”

Mr. Dolnick, representing the private sector, joined Joseph Mazza, San Diego-based director of risk management for the state-run MiraCosta Community College District, in helping to describe the key differences in risk management between the public and private organizations and the strengths and weaknesses of each.

There are fewer choices in the public sector because of stricter accountability, said Mr. Mazza, who is also a past-president of the RIMS San Diego chapter. “(There are) many bureaucratic hurdles in the public sector.”