Abstract
This world is rife with uncertainties. Risk management plays an increasingly important role in both the public sector and the private sector. Considering that government is the risk manager of last resort, government faces a vast variety of risks and disasters, either natural or manmade. Owing to scarce public resources and increasing public needs, government is not capable to finance all risk management programs. However, once a catastrophic event occurs, government must take immediate actions to control the event. This essay intends to explore the relationship between risk management and budgeting in the public sector. It attempts to demonstrate to what extent and in which areas risk management depends on budget and competes against other public expenditures, and if budget austerity blocks risk management. The analyses of risk management activities and budget cycles find that budgeting generally serves as a facilitator and catalyst to risk and disaster management; and risk and disaster management is mostly a competitor in budget process; and severe unexpected disasters and crises drive and overshadow budgets to deal with the serious consequences ever incurred. This essay suggests particular measures that may help establish a virtuous relationship between budgeting and risk management.
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- 1.
The GAO Risk Management Framework was development by Government Accountability Office, a nonpartisan federal government agency that provides auditing, evaluation, and investigative services for the US Congress. The framework incorporates requirements and standards the Government Performance and Results Act of 1993, the Government Auditing Standards (2003 revision), GAO Standards for Internal Control in the Federal Government, guidance from OMB, the work of the President’s Commission of Risk Management, and the enterprise risk management approach of the COCO.
- 2.
COSO Enterprise Risk Management-Integrated Framework was created and published by the Committee of Sponsoring Organizations of the Treadway Committee in 2004. The framework consists of three dimensions of enterprise risk management, each of which includes components that may affect fulfillment of organizational objectives.
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The author would like to thank Dr. Victor Chang sincerely for his suggestion and for the opportunity to work on this essay.
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Lu, Y. (2017). The Relationship Between Public Budgeting and Risk Management: Competition or Driving?. In: Chang, V., Ramachandran, M., Walters, R., Wills, G. (eds) Enterprise Security. ES 2015. Lecture Notes in Computer Science(), vol 10131. Springer, Cham. https://doi.org/10.1007/978-3-319-54380-2_3
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