Risk Mitigation in Local Government
Why policies and procedures are key in risk reduction and risk avoidance.
- What is risk mitigation?
- Risk mitigation strategies you can enact now.
Local government agencies cover a wide range of responsibilities. From law enforcement to public facilities to public education, the workings of local government affect every member of the community.
This breadth of responsibility leaves local governments open to many different types of liability exposures and risks.
Local governments must comply with an extensive list of laws, regulations, and ethical standards in every department.
Some departments, such as public safety, are more at risk than others, but every department faces significant liability risks.
Therefore, it is essential for local governments to develop a framework for risk mitigation.
Governments need to be aware of potential issues such as misappropriation of funds, employee misconduct, ethics violations, negligence, injuries, and more. Civil lawsuits over these issues cost local governments millions of dollars every year.
However, good risk mitigation strategies can help governments implement internal controls to proactively address these issues and reduce liability.
When proper risk mitigation and management strategies are in place, government entities can use resources to improve programs and services instead of getting caught up in legal disputes.
What Is Risk Mitigation?
Simply put, risk mitigation is the process of taking steps to reduce the potential loss and harm of a risk.
Usually, the first step of risk mitigation involves evaluating the likelihood of a risk and how much damage it would cause.
Organizations in every industry face risks, and some level of risk is unavoidable. Risk mitigation – or risk reduction – is a method of risk management. Other methods include risk avoidance, risk transfer, and risk acceptance.
Local governments can’t completely avoid all risks. If government agencies are too cautious in avoiding risks, they miss opportunities for innovation.
Every new program involves some level of risk. And if local governments never implement new programs or new technology, they may become ineffective and inefficient.
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However, local governments can limit the impact of risks by implementing controls and planning. Implementing risk mitigation strategies ensures that government agencies comply with laws and standards and use resources responsibly.
Risk mitigation helps agencies operate effectively and know how to respond in the case of an emergency.
Effective risk mitigation also helps local governments maintain trust with citizens. Citizens can trust that the government is operating lawfully, ethically, and in the best interest of the community.
Risk mitigation vs. risk management
Risk mitigation and risk management are often used synonymously, but they aren’t necessarily the same thing.
Risk management usually describes the overall program of identifying and addressing risks. Some local governments and large organizations employ a full-time risk manager to monitor operations, assess exposure, and create strategies to reduce risk.
Risk mitigation is taking steps to minimize or eliminate unacceptable risk. It is part of the plan for risk management, but it doesn’t have to be complicated.
An employee doesn’t have to be a full-time risk manager to take steps to reduce risk, but every employee plays a part in helping mitigate risks.
Some mitigation tactics may just seem like common sense. Backing up important files, for example.
Risk management and risk mitigation go hand in hand. It’s important for local governments to have a comprehensive strategy for managing risks, but the strategy will only work if everyone is working individually to mitigate risks.
Risk mitigation is proactive
Some local government agencies operate without a risk mitigation strategy in place.
When things are running smoothly, it can be hard for leaders and administrators to see the need to assess risks and document processes. This can especially happen when governments view each separate department and sector as a standalone entity.
When each department is left on their own to govern employee behavior and track compliance, it leaves more room for inconsistencies and risky practices.
A reactive mindset leaves government agencies behind the curve when an incident arises.
If a local government waits until after an incident occurs to take steps to address the risk, the effects of the incident can be far more long-lasting and damaging.
Risk mitigation should be proactive. Local governments should regularly think through potential risks and put plans in place to prevent and reduce those risks ahead of time.
This not only helps local governments quickly control and address an incident, but it also protects against liability.
As the Insurance Information Institute points out, having written records of efforts to follow regulations and maintain a safe environment can keep organizations out of court.
If you can provide evidence that you took your responsibility seriously and made reasonable efforts to prevent harm to others, you are much less likely to be found liable … Documenting your efforts to behave lawfully can be vital to proving that you are not liable.
So what should local governments do to mitigate risks?
Risk Mitigation Strategies You Can Enact Now
Every employee plays a part in reducing risk, but local governments should have a larger plan in place to guide risk management and mitigation.
Here are a few things governments can do to reduce risks:
Conduct a compliance risk assessment
Governments can’t plan for a risk they’re not aware of. Therefore, the first step of risk mitigation is assessing the biggest risks facing an agency or department.
Governments should examine external risks, but they should also look at internal processes.
Many of the biggest risks come through a gap in policy or a lack of compliance. A compliance risk assessment involves systematically comparing the current operations in each department with the proper policies and procedures.
This may sound like a daunting task or something that needs a lot of risk management expertise. But it doesn’t have to be.
Taking time to conduct some in-person interviews and shadowing people at their jobs will allow government agencies to see where there are holes that need to be addressed.
Employees know the inner workings of their department, and they are often aware of liability risks that management may have overlooked.
This type of risk assessment is typically best handled by someone outside the actual department who can bring a more objective viewpoint. But it doesn’t require a skilled risk manager.
It could even be done in a collaborative manner with members of other departments.
Policy and procedure review
We’ve written before about the importance of policies and procedures. Policies and procedures guide internal operations and help ensure that every employee knows the rules and expectations.
Policies and procedures should be living, changing documents. Outdated policies and procedures can increase risks since they may not address current regulations or current technology.
Local governments need to systematically review policy manuals to make sure that they are up-to-date and accurately reflect current practices and priorities.
These reviews should involve representatives from different departments as subject matter experts.
As we wrote in our post about How to Manage Your Local Government Handbook, government agencies should review policies and procedures at least annually, if not more often.
Keeping policies and procedures up to date is an essential part of risk mitigation. Written policies decrease liability by showing the steps a government agency took to follow laws and implement safe practices.
Have employees sign policies
It’s not enough simply to have policies in place. Local governments must make sure that employees read and understand policies.
Collecting employee signatures can help limit a government’s liability if an employee violates policy.
Having a record that proves that an employee saw and affirmed the policy shows that the government agency is not at fault for the employee’s misconduct.
Employee training and regular retraining
Regular training can also help local governments limit liability risks.
Training helps employees see how to apply policies and procedures to their day-to-day work. It helps employees know how to do their specific jobs, but it also shows them how to implement higher-level policies to their day-to-day behavior.
Training shouldn’t just happen during the onboarding process.
Government agencies should conduct regular retraining in high-liability areas such as sexual harassment and discrimination. Reminding employees of laws and expectations can help prevent incidents.
Keeping up-to-date training records can also help local governments limit liability. Training records show that government agencies did their due diligence in communicating expectations for lawful behavior.
An online training management tool can help governments easily keep accurate records. It can also save time, money, and make sure training content aligns with the most up-to-date policies.
Local governments can’t afford to wait until an incident occurs to create a plan to address it.
Risk mitigation strategies can save governments millions of dollars a year in lawsuits. Risk reduction can also help governments operate more efficiently, maintain public trust, and swiftly address any crises that do arise.