Enterprise Risk Management, 2nd Edition

CHAPTER 12Increasing Adoption of Enterprise Risk Management in the U.S. Federal Government

 

THOMAS H. STANTON¹

Former President of the Association for Federal Enterprise Risk Management (AFERM)

 

INTRODUCTION

Through a process of trial, error, and success, practitioners of enterprise risk management (ERM) in the U.S. government have come to recognize the importance of cultural change as necessary to achieve buy-in from the political leadership, career senior executives, and staff of government departments and agencies.² Because ERM depends on eliciting information from across an enterprise and up and down the hierarchy, cultural acceptance is needed to make ERM a practical reality. The way that ERM has spread in the federal government reflects the unusual institutional characteristics of the U.S. government compared to characteristics of more centralized administrative states such as exist in the United Kingdom, Canada, and Australia, which are three other countries that have sought to make ERM a feature of public management.

This chapter begins by recounting the origins of ERM in the U.S. federal government in the early 2000s. ERM practitioners adopted a network model of bringing ERM to management practices in an increasing number of agencies. A network approach was effective, not only because of the decentralized nature of the U.S. federal government, but also because, as the second section explains, ERM itself is more robust when managers practice it as a way of increasing ...