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Updated Guidance Issued to Reduce Agency Risk

On Friday, the Office of Management and Budget (OMB) released the revised Circular A-123 with updated guidance that requires agencies to increase their efforts to reduce operational risk.

The revised Circular “modernize[s] existing efforts by requiring agencies to implement an Enterprise Risk Management (ERM) capability coordinated with the strategic planning and strategic review process established by [the Government Performance and Results Act Modernization Act].” 

In a White House blog published the day the updated guidance was issued, OMB Controller David Mader explained, “ERM has been a common practice in the private sector for years now, and it’s not entirely new to government either… it identifies the range of possible events, or the full spectrum of an organization’s significant risks… In other words, ERM pulls all the challenges together from various parts of the organization to ensure that a portfolio view of risk is available at the highest levels of leadership to help inform decision-making.”

The memo from budget director Shaun Donovan, which went out to all agency heads, also highlighted that, “Successful implementation of this Circular requires Agencies to establish and foster an open, transparent culture that encourages people to communicate information about potential risks and other concerns with their superiors without fear of retaliation or blame.”

In his blog, Mader also pointed to an ERM Playbook of best practices, which was developed by an interagency cross-discipline team to support agency implementation and will be issued by the CFO Council and the Performance Improvement Council in the coming months.

Posted in General News

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