A Comparison of the Local Authority Adoption of Risk Management in England and Australia

Abstract

This paper analyses the context and use of risk management in local authorities in England and Australia. The basic structures of risk management were found to be common across all four local authorities in both countries. However, substantial differences were found in the national context in which risk management was used. The national context in each country was compared, and a large and small local authority in each country was used for illustrative purposes. The research findings were tested against institutional, contingency, resource dependence, and political perspectives. The research finding is that each theory was necessary but not sufficient and a pluralist approach was formulated to explain the similarities and differences in risk management in local authorities across two countries.

Accountability and Expertise in Public Sector Risk Management: A Case Study

“…Consistent with foundational work in new institutional theory (Meyer and Rowan, ; and DiMaggio and Powell, ), the new risk management framework was related to environmental influences such as external frameworks and guidance, professional networks and external assessment criteria. In line with prior public sector studies (Crawford and Stein, ; Woods, ; and Collier and Woods, ), risk management has been positively recognised by external entities, suggesting that external accountability was a key factor in the adoption and retention of risk management. Nonetheless, the case study evidence challenges the idea of a clear‐cut distinction between intra‐organisational dynamics and external pressures.…”

“…First, the study shows the relevance of risk management as an accountability tool, extended by means of disclosure to the scrutiny of distant others. In line with prior studies (Crawford and Stein, ; Woods, ; and Collier and Woods, ), accountability expectations are shown to be related to environmental pressures such as government policies, external assessment criteria, and professional standards. The paper adds to the literature by exploring the multifaceted nature of exchange and communication of internal mechanisms between an organisation and external entities.…”

“…Three clusters of empirical evidence suggest that the progress of risk management can be related to competitive, regulative and cognitive pressures (DiMaggio and Powell, ), similar to the findings of prior research on public sector risk management (Crawford and Stein, ; Woods, ; and Collier and Woods, ). First, external frameworks and guidelines constituted a key reference point in developing and reviewing risk management.…”

“…The same study shows normative influences as the risk management control system was supported by personnel undertaking examinations for professional bodies such as the Institute of Risk Management (IRM). Research on Australian and UK local authorities (Collier and Woods, ) reveals that compliance with legislation was a key driver in risk management implementation and that the external monitoring of risk management had effects on financial resources allocation.…”

Managing risk in the public sector – The interaction between vernacular and formal risk management systems

“…Risk management is no longer a private matter for experts; it has become increasingly publicly certifiable and visible because of its role in defining organizational virtue and legitimacy (Power, ). This suggests that the adoption of formal risk management systems is related to competitive pressures and regulations, such as standards set by professional groups and widely accepted conceptions of “best practice.” Prior research on “new” risk management in the public sector demonstrates a combination of these factors (Collier & Woods, ; Louth & Boden, ; Palermo, ; Woods, ). Thus, the adoption of formal risk management systems in public sector organizations can be seen as a “best practice template for organizing risk management in response to environmental influences” (Palermo, , p. 327).…”