“The White House is putting enterprise risk management front and center in its update to a key policy on internal controls expected later this year”
According to OMB’s A-123 Rewrite to Flip Risk Management on Its Head, Federal News Radio, February 11, 2015
We reported earlier (Are the Feds Mandating ERM? Yes) that US Federal Office and Management and Budget (OMB) was requiring all departments to implement operational ERM. Well we are getting more information and confirmation of their plans.
OMB will provide a draft of the new A-123 roes at the CFO Council in the the spring of 2015.
The guidance will go into effect in fiscal 2016.
NO LONGER CHECK THE BOX
The guidance encourages to follow the private sector. As many of these mandated initiatives, there is a “check-the-box” compliance approach.
OMB wants departments to “incorporate risk management into their operations.” OMB wants agency managers to assess their risk appetite and develop appropriate controls.
Why?
“Enterprise risk management flips that concept on its head. Rather than focusing on stopping the bad stuff, it requires agencies to look for opportunities to do things differently, which may mean taking new risks to maximize benefits.”
WHO WILL LEAD THE OPERATIONAL RISK PROGRAMS?
Some agencies may hire Chief Risk Officers to coordinate risk functions across the agency.
OMB understand this is going to be a cultural challenge, specifically:
“But the big issue is positional authorty. Do you have the authority to do that? Can you go into someone’s silo and say, ‘I’m going to control your operation, drive efficiency and bring risk management to your operation?”
There is no easy answer to the above question. It’s up to the agency and department leaders to drive the change.
The people who will lead the effort will have a background in operational internal control.
What we do know is:
“Everyone is a risk manager within the organization, said the Deputy CFO of the Education Department.
Bio:
Greg Hutchins PE and CERM (503.233.101 & GregH@QualityPlusEngineering.com) is the founder of:
CERMAcademy.com
800Compete.com
QualityPlusEngineering.com
WorkingIt.com
He is the evangelist behind Future of Quality: Risk®. He is currently working on the Future of Work and machine learning projects.
He is a frequent speaker and expert on Supply Chain Risk Management and cyber security. His current books available on all platform are shown below:
