What the Public Sector Can Learn from the Private Sector’s Embrace of Integrated Risk Management
Governments worldwide are grappling with an increasingly complex risk landscape. From economic uncertainty and cyber threats to geopolitical instability and declining public trust, the public sector faces a daunting challenge: how to manage risks effectively while maintaining public service delivery and fiscal responsibility. EY’s latest report, Top 10 Risks for Government and Public Sector in 2025, underscores the urgency for Integrated Risk Management (IRM) as a strategic necessity.
While risk management is not new to government institutions, the public sector lags behind the private sector in adopting a truly integrated approach. The world’s leading corporations have embraced IRM as a critical framework for anticipating threats, enhancing resilience, and driving long-term value creation. It is time for the public sector to take a page from the private sector’s playbook.
Why the Public Sector Needs to Learn from the Private Sector
EY’s report highlights key risks that demand a shift toward IRM in the public sector:
Public debt and fiscal sustainability: Private enterprises have long understood the need for financial discipline, scenario planning, and risk-adjusted decision-making. With public debt projected to reach 115% of global GDP by 2026, governments must adopt more rigorous risk-based budgeting and financial resilience strategies.
Economic fragility and workforce shortages: Businesses constantly adapt to labor market shifts by investing in workforce development, upskilling employees, and leveraging automation. Governments must do the same to address the increasing informality of work and the shrinking tax base.
Cybersecurity and digital threats: The private sector has invested heavily in AI-driven threat detection, cloud security, and incident response. In contrast, many public sector organizations continue to rely on outdated infrastructure, exposing them to cyber risks.
Geopolitical volatility and supply chain resilience: Global corporations use advanced risk analytics and diversified supply chains to mitigate geopolitical risks. Governments, however, often struggle with fragmented risk management approaches that fail to anticipate and prepare for disruptions.
“The private sector has long recognized that risk is not just something to be mitigated—it’s something to be managed proactively to create value. Governments can no longer afford to treat risk management as a compliance exercise. They must embed it into their decision-making processes to ensure resilience and restore public trust.”
The Core Lessons of Private Sector IRM
The private sector has recognized that risk is dynamic, interconnected, and must be managed holistically. By embedding risk intelligence into strategic planning, businesses have not only protected themselves from threats but also seized opportunities for growth. Governments should follow suit by following these lessons.
Embedding Risk into Strategy
Leading corporations have moved beyond reactive risk management. They integrate risk intelligence into strategic decision-making, allowing executives to anticipate challenges before they materialize. Governments must adopt a similar approach, moving from short-term crisis response to long-term risk-informed policy decisions.
Leveraging Data and Advanced Technology
AI, machine learning, and predictive analytics have transformed risk management in the corporate world. Companies harness vast amounts of data to detect patterns, predict risks, and respond proactively. Governments must invest in similar digital capabilities to enhance their situational awareness and resilience.
Breaking Down Silos
In the private sector, IRM unifies risk, compliance, audit, and governance functions under a single framework. Governments often suffer from fragmented risk management approaches, with different agencies operating in silos. An integrated, cross-government risk strategy is essential.
Building a Risk-Aware Culture
Businesses invest in risk awareness training across all levels of the organization. Governments must cultivate a similar risk-conscious mindset, ensuring that public officials—from frontline workers to senior leaders—understand and actively manage risks.
Enhancing Public Trust Through Transparency
The best private sector organizations don’t just manage risks—they communicate their risk strategies to stakeholders to build confidence. Governments need to be more transparent about how they assess and mitigate risks, demonstrating to citizens that they are prepared for future disruptions.
How the Public Sector Can Implement IRM
EY’s report makes it clear that the status quo is unsustainable. Governments must take decisive steps to embrace IRM:
Adopt risk-based budgeting: Allocate resources based on long-term risk impact rather than short-term political priorities.
Invest in cybersecurity and digital resilience: Modernize IT systems, improve cross-agency data sharing, and establish robust cybersecurity frameworks.
Foster collaboration between public and private sectors: Leverage partnerships with risk management leaders in the corporate world to share best practices and technological advancements.
Develop cross-sector risk intelligence networks: Establish shared data hubs and predictive analytics programs to anticipate risks before they escalate into crises.
Measure and communicate risk performance: Implement clear risk metrics and reporting frameworks to improve accountability and transparency.
Time for Governments to Act
The risks facing governments in 2025 are not isolated—they are interconnected, rapidly evolving, and require a proactive approach. The private sector has spent decades refining IRM as a means of navigating uncertainty, protecting value, and fostering resilience. Now, it’s time for governments to follow suit.
Governments that embed IRM into their operations will not only be better prepared for future crises but will also demonstrate competence, stability, and leadership in an increasingly unpredictable world. As the window of opportunity to act narrows, public sector leaders must recognize that risk management is not just a defensive strategy—it is a foundation for sustainable success.
References
1. EY Global (2025). Better Risk Management Key for Government Success in 2025.
2. EY Global (2025). Top 10 Risks for Government and Public Sector in 2025.
3. International Monetary Fund (IMF) (2024). World Economic Outlook: Policy Pivots, Rising Threats.
