Culture of risk management beginning to emerge at the Fiscal Service

The Bureau of Fiscal Service in the Treasury Department is managing and measuring risk at a whole new level.

Where once risk management was just mostly a CFO led initiative, now the Fiscal Service’s entire senior leadership cadre is involved.

Nicole Puri, the chief risk officer at the Bureau of the Fiscal Service in the Treasury Department and the past president of the Association for Federal Enterprise Risk Management (AFERM), said enterprise risk management has bled into a host of important areas including budgeting.

“It’s starting to get incorporated more into everyday conversations. We’ve definitely done a couple of specific things to try to advance the risk culture here,” Puri said in an interview with Federal News Network. “The biggest thing I think we’ve done and done successfully is our senior executive involvement in really determining what are the risks, what are the big risks of the of the agency, and what we’ve seen over time is as they have had that involvement and have had those discussions, it has started to flow through into other forums. I think we have seen a cultural shift in how we make our investment decisions. We have a specific forum where we talk about our investments and risk now comes up regularly.”

The discussions aren’t just centered on the specific or enterprise risks of today, but Puri said more and more leadership is talking about the potential future and real problems that may hinder a project or mission initiative.

She said the Fiscal Service is doing a better job prioritizing those risks and then sharing them across the agency.

“I think that we’ve also seen our executives really start to hold people accountable for the planning and execution piece. That’s a cultural aspect to thinking about risk more,” she said. “We’re asking people, ‘Hey, have you planned for risk? Have you thought about it? How are you going to handle certain things that might come up?’ And then lastly on the senior executive side, it is starting to be a factor in how we allocate our funding. That’s a slow process to go through, but we’re definitely starting to see some advancement there.”

That advancement has been a long time in coming. It’s been six years since the Office of Management and Budget updated Circular A-123 where it introduced a governmentwide risk management program. The CFO Council followed that update with an ERM playbook to further help agencies develop their programs.

Last spring, AFERM, which is hosting its annual summit Oct. 26-27 in Washington, D.C., released a new ERM practice guide that initially focuses on four areas to help agencies further develop their programs.

“There is a very structured way of how we approached the practice guide. We defined what an area is. For example, if we talk about enterprise risk governance, our first area of focus, we describe what it is and we intentionally used the description as it applies to federal government,” said Daniella Datskovska, the outgoing president of AFERM in an interview in March. “We also define what we believe as AFERM the main principles and attributes of ERM governance or any of the other areas. We try to give very practical examples of what it means and what it looks like. So if, for example, we talk about enterprise risk governance, one of the attributes is understanding what constitutes organizational value. We would describe what an organization value is; we would explain why it is important, and then we would give examples of how agency might achieve that attribute of organizational value.”

Looking at more strategic risks

Puri said the Fiscal Service is finding that organization value through its enterprise risk management framework that helps establish its governance structure to help the agency not just manage operational risk, but strategic risks too.

She said one example of that strategic risk that Fiscal Service and other agencies face is around their workforce.

“We’ve had more focused discussions on that, and that means people are thinking about it more. They’re paying more attention to it in their day-to-day work. I think it has really us helped focus in on where are our risks,” Puri said. “That’s not just happening in the risk committee meetings, that’s happening in multiple meetings across the agency. It’s not something that I think you identify ahead of time and say, ‘We’re going to do this,’ but it’s something that evolves over time where we’re always trying to figure out what’s going on right now, how are things, how do we expect things to change? We’ve gotten better at that process and that’s what has helped us start to focus in on some of the specific risks and what we can do about them. You will have to do that analysis to understand what’s causing something in order to be able to address it.”

Puri said data will continue to drive the Fiscal Service’s risk decisions. She said their chief data officer, Justin Marsico, who is modernizing the service’s data footprint, is helping to train and provide tools for mission areas to make better use of data.

“We are relying on our program areas to use their data and then to monitor it. What we do is help facilitate the process of figuring out what the right connections are, and thinking through what those data points are that we want to track,” Puri said. “But we don’t we don’t use any specific tool. I think we need to advance and get a little bit more mature probably before we would think about using a tool and try to educate our folks on data analytics and how to use data better. Once we get a little bit more advanced in that, we’ll be able to use tools to actually monitor data for risk.”

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