Best practice: Enterprise Risk Management*

Historically, risk management has tended to focus on the negative – how do we identify what might go wrong? How bad will things get if it does? How can we stop it?

Another feature of old-fashioned risk management has been the tendency for it to be “siloed”, with each department having its own approach to managing risk.
Modern, best practice Enterprise Risk Management (ERM) has moved contemporary risk management programs and thinking beyond these limitations.

ERM has a range of benefits for modern Local Government:
  • ERM achieves efficiencies across the whole of Council by integrating a common approach throughout all functional areas
  • ERM avoids the pitfall of concentrating on minor risks (such as slip hazards) at the expense of big picture risks (such as failure of critical infrastructure)
  • ERM captures the positive side of risk management, by also considering opportunities for new services, process efficiencies, improved methods of service delivery etc.

QRMC frequently assists councils to develop or expand their risk management programs to embrace ERM. Our experience has outlined potential obstacles to successful ERM, which include:
  • failure to recognise that risk management is an ongoing, not one-off, process
  • treating risk management as a compliance exercise instead of a tool to achieve business objectives
  • inadequate consultation with, and training of, personnel at all levels
  • insufficient efforts to integrate ERM across all departments and systems
  • lack of committed leadership.

Engagement of an external consultant to assist in the development and implementation of an ERM program can provide an independent and objective facilitator to guide councils through these common obstacles.

*Copy supplied by QRMC

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