Government and public sector organizations will need to make a series of difficult and potentially unpalatable trade-offs that are necessary to mitigate risk and prevent larger crises down the line.
Sofia Stoican, Partner, Business Consulting, Government and Public Sector, EY Romania: "In a world marked by uncertainty and rapid change, government and public sector leaders must adopt a proactive approach to risk management to regain public trust. By investing in integrated risk management systems, public sector organizations can become more agile and responsive, thereby demonstrating the value of proactive governance and the tangible benefits it can bring to society."
The top 10 risks for government and public sector identified by the EY Report:
- Inability to achieve sustainable public finances,
- Weak or unsustainable public growth,
- Labor shortages and growing work informality,
- Deficient digital capacity and cybersecurity,
- Failure to adapt to a new geopolitical landscape,
- Limited or no supply chain visibility and traceability,
- Low employee resilience hampering public sector talent advantage,
- Failure to close the gap between climate ambition and action,
- Lack of resilience to climate-related shocks,
- Unconnected to constituent experiences and needs.
Meeting uncertainty with confidence requires integrated risk management
The need for change is not a novel concept for government and public sector leaders. However, the window of opportunity to act is rapidly closing, and maintaining the status quo will exacerbate existing issues. It is likely that disruption will not only persist, but it will also become more interconnected in the foreseeable future. Many of this year's top 10 risks intersect and impact one another, compounding the complexity of both governing and the challenge of implementing resilient change.
An increase in transactional decision-making on the world stage is anticipated in 2025, potentially dismantling international agreements, alliances and norms, thereby contributing to instability and economic precarity. This shift could lead to unexpected disruptions in areas such as supply chains, trade and migration. These disruptions, if not effectively addressed and/or mitigated, could undermine public resilience and erode trust in government.
Effectively mitigating risk can demonstrate value
The report finds that managing risk can no longer be a siloed activity relegated to annual planning or discussions between high-ranking officials. Public sector leaders, regardless of rank, need to continually evaluate risks on the horizon and engage stakeholders in and outside their organizations to effectively adapt and respond.
