Ethos Issue 7, Jan 2010
Enterprise Risk Management:
Strengthening Singapore’s Advantage
Ang Hak Seng
ERM could serve as a shared platform for understanding complexity and
assessing trade-offs at the whole-of-government level.
The concept of Enterprise Risk
Management (ERM) is not new
to the Singapore Government.
Many public sector organisations already
implement risk management, either as
a deliberate initiative or as part of the
inherent nature of their work. However,
ERM has much more to offer the public
service as a whole, because of its two key
value propositions: its ability to serve
as a unifying framework for strategic
planning and the opportunity it offers
to enhance Singapore’s competitive
advantage in an ever more complex and
turbulent future.
ERM AS UNIFYING PLATFORM
ERM recognises uncertainty as
the fundamental driver of strategy
At its heart, ERM is a way of thinking that
recognises uncertainty as a fundamental
driver of strategy. As a concept, it can be
applied to all levels in an organisation or
across agencies, yet is scalable enough to
engender thinking about key strategic
challenges at the sectoral or national level. One fundamental strength of
ERM, as opposed to many other strategic
planning methods, is that it avoids over-reliance
on past data as the basis of
decision-making.
ERM highlights multi-agency trade-offs,
and therefore motivates a WOG approach
At a strategic level, the sources
of uncertainty are complex and
intertwined. A risk-driven approach
lends itself to framing issues in a Whole-of-
Government (WOG) context. By
moving away from outcomes and intents
of individual government organisations
and looking upstream to consider risks
and their drivers, ERM helps to transcend
the traditional demarcations and roles
that separate government organisations.
ERM unifies strategic planning tools
Different types of strategic planning
tools are more suited to different levels
of uncertainty.1
Traditional planning tools which
project only one state of the future
can be grossly inadequate in the face
of deeper uncertainty. To address this
inadequacy, scenario planning tools
were developed. The scenario planning
approach, which describes discrete (and
sometimes artificial-seeming) future
states of the world, copes best with up
to "Level 2" states of uncertainty. ERM,
by helping planners to better appreciate
the level of uncertainty at which a risk
resides and applying the appropriate
tools, offers a way to think about issues
more holistically and at different levels
of predictability, thereby deriving more
calibrated and thorough plans.
STRENGTHENING SINGAPORE’S
COMPETITIVE ADVANTAGE
The realm of greater uncertainty is
also a source of greater opportunity. In
a predictable environment, Singapore must compete with other countries on
known terms and resources. However,
in a world where turbulent events are
becoming more frequent and intense, a
key competitive advantage will reside in
Singapore’s ability to compete in terms
of speculative capabilities—making
successful strategic bets despite limited
or imperfect information. As countries
continue to grapple with how best to
deal with great uncertainty, Singapore
can seize the initiative by leveraging on
its small size, networked government
and future-oriented outlook to tackle
issues head on and in advance.
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