About Public Values and Risks

public-values-risksBy Jack Kruf.

From the many meetings with public leaders and city managers in the last five years emerged a personal (growing) conviction that the interpretations and definitions of the terms ‘public value’ and hereto related ‘public risk’  have become highly diversified.

This diversification makes a sharp and focused dialogue between institutions (business, media, non-profit, government and science) in the public domain – society and the natural environment as a whole – more difficult than necessary.

The reasons for this phenomenon are – generally spoken – fragmentation of science,  segmentation of craftsmanship and growing power of stakeholder columns. Hereby, I write my plea for the use of a standard, based on the ISO 31000 and the scientific work of Mark Moore (Harvard).

Consider this as a small contribution from my perspective to make the definition of risk less diversified and more co-branded with results.

Public Value

The term public value is not so often used in public governance discussions. In my view the definition of Moore is so adequate and precise that it deserves a more central place. After all, public governance is “the way to steer to” public values. The direction, where to govern to, is pretty important after all. A process without a goal or objective can be considered as a river without borders, is it not? Public objectives and values are in the center of the essence of public governance.

Mark Moore (1995) stated:

“Values are not only arbitrated by individuals within organization, networks or society as a whole itself but also as a collective, acting through the instrumentality of representative government. The collective of society is represented formally by the city council but in broader sense it could be communities or networks that deliberate with one another and decide what the purposes of the public organizations, network or society will be.”

Accordingly Benington and Moore in 2011:

“Public value’ is the value that government creates through its citizens and which citizens themselves value. It should be understood not simply as ‘what does the public most value’ but as ‘what adds most value to the public sphere?”

Public Risk

The International Organization for Standardization (ISO) defines ‘risk’ as ‘the combination of the probability of an event and its consequences (ISO 31000 and IEC 2002). It includes chance (probability or likelihood) and potential upsides or downsides of the event (consequences or magnitude) and the way risk has an impact on the organization’s ability to achieve its objectives. Uncertainty can be viewed as the variability surrounding a risk, as the range of outcomes that may result from the occurrence of a risk event. In short:

Risk = the effect of uncertainty on objectives.

Knight (2010), chairman of the committee ISO 31000, who worked on the standards and guidelines:

“Risk is all about uncertainty or, more importantly, the effect of uncertainty on the achievement of objectives. This new definition is clearly different from existing guidelines on the management of risk in that the emphasis is shifted from something happening – the event – to the effect of uncertainty on objectives. Every organization has objectives – strategic, tactical and operational – to achieve and, in order to achieve these objectives, it must manage any uncertainty that will have an effect on their achievement. The really successful organization … work on understanding the uncertainty involved in achieving their objectives and ensuring they manage their risks so as to ensure a successful outcome.”

Before Knight chose this path, Lynn Drennan and Allan McConnell (2007) already defined – regarded from the perspective of government as steward of society:

“Public Risk is the chance of something happening that will have an impact on Public Values.”

And at the beginning of the discussions between city managers at the PRIMO conference in Kopenhagen under the chairmanship of Allan Vendelbo, who was the former president of UDTE, public risks were defined by Martin Fone and Peter Young (2005, p21) as:

“those pertaining to issues or processes that arise from the assertion of matters of public interest – those matters relating principally to the protection of rights, the balancing of interests, and the assurance of fairness in the political process.”

In the podcast of Special Reports, 11 February 2010 The Economist described the Financial Risk (related to analysis of the credit crisis) as:

“Risk is a deviation from objective.”

This definition is close to the ISO definition.

Public risk as deviation from desired public value

Taking the definitions of Benington & Moore and ISO as a starting point and the analyses of Fone, Drennan, McConnell, Young and the Economist, we can derive the following equation:

Public risk = the effect of uncertainty on public values

In this regard a public risk can be considered as a deviation from the desired (read: in our democratic system chosen) public value, such as safety, social cohesion, a project to be managed within time and budget, optimal care for our youth, a good climate for entrepreneurs or a balanced (read; autonomous biodivers) natural environment. In fact anything that citizens value as most important.

Deviations then are organizations going ‘down’ by cyber-attacks, an unbalanced district within a city, budget overruns or spoiling of tax money with non-feasible strategies and policies, a fragmented care system citizens, suboptimal economic, the structural loss of the natural habitats and biodiversity, pollution, poverty and decline.

Public values are in fact those values where people in a democratic system actually vote for, and which in fact should be embedded in the strategic plans of the elected and governing councils and accordingly anchored in legislation, products and services of the organizations and stakeholders who serve these values.

The challenge lies in managing the uncertainties in realizing these desired public values. There is the need to do so. In the before mentioned international meeting it was concluded that only 12 percent of the policy plans where effective and that some major programs have (at the start) an estimated 8 percent of the means to realize them, 25 percent of all projects have structural overruns or never meet their deadline. In sum, being more effective in governing and in line with the objectives could benefit us all.

So public risk management actually ís public value management. Like the way archers reach for their target, city managers and public leaders reach for the public values. In doing so, I am sure we can learn from the expertise of Robin Hood or Wilhelm Tell.  From their drives, secrets, skills and insights to hit the target in the very heart.

In search for support

It is not an easy job to get to the target because the social system is very complex, stakes and interests are often immense and the uncertainties are massive. Public Risk Management Organisation (PRIMO) and Union des Dirigeants Territoriaux de l’Europe (UDITE)  – The European City Managers association – started a dialogue-oriented approach 7 years ago and cooperate since that moment in the “care about good governance”-approach, i.e. to make strategies, policies and implementation processes more effective from the perspective of city governments (municipalities) in realizing the desired public values.

Both associations are focused on reducing uncertainties by properly addressing and assessing uncertainties to minimize the public risk, that is the deviation from the political and democratically chosen desired values.

Bibliography & Artography

Benington John & Mark H. Moore, 2011, Public Value: Theory & Practice. Palgrave MacMillan.

Drennan, Lynn and Allan McConnell, 2007, Risks and Crisis Management in the Public Sector. Routledge, Oxon, 249 pp.

Fone, Martin and Peter C. Young, 2005, Managing Risk in Public Organizations. Perpetuity Press, Leicester, 198 pp.

Moore, Mark H, 1995, Creating Public Value: Strategic Management in Government. Harvard University Press, 416 pp.