Human capital has overtaken cybersecurity and privacy as the predicted top priority risk area in the next three to five years, according to a survey of federal government leaders.
While cybersecurity and privacy maintained its spot as the top risk area garnering management focus, current patterns in Enterprise Risk Management suggest changing tides as the field develops further.
The annual survey, which is conducted by Guidehouse and the Association for Federal Enterprise Risk Management, collects commentary from federal executives regarding ERM. The 2022 edition of the study was released by the Chicago, Illinois-based company on Thursday.
Guidehouse ERM Director Kate Sylvis identified employee retention, morale and engagement as popular responses in the human capital category. She also commented on the expanding ERM advancements across the public sector.
“We continue to see federal agencies exhibiting overall ERM performance levels reflective of an emerging capability – and expanding incremental positive trends related to effectiveness, integration, culture and risk appetite,” Sylvis stated.
Beyond human capital, Sylvis revealed that one-third of those surveyed see environmental and social issues creating risk for their agencies within the next three years, further emphasizing the state of transformation surrounding ERM.
Agencies have already begun to adapt to these changes, with 90 percent of respondents mentioning updates to their risk appetite statements during the past three years. On the technological side, the use of enterprise Governance Risk and Compliance tools is rising, with 12 percent of respondents reporting that they use one of these tools as their primary program for tracking risk data.
Other advancements have been made in the area of “tone at the top, executive support for risk management,” which was identified as the greatest area of growth in handling both present and future risks.
Despite the growing number of agencies implementing new ERM strategies, concerns surrounding budget parameters have increased, with 65 percent of respondents reporting that their budgets have stayed the same and six percent reporting that their budgets have decreased over the past year.
Organization culture and leadership styles have also caused challenges in implementing formal ERM programs.
Looking into the future, respondents flagged the consolidation of ERM with other management processes in areas of strategy, performance and budget projects as having considerable room for improvement.
Full results of the survey can be found here.