What is the importance of risk management in a municipality?

It is important to manage risks in any organization. If you know what can go wrong and do your best to develop contingency plans for many risks, you can mitigate (reduce the damage or danger) that risk. An example for a municipality of a risk that needs management is how to handle snow removal. As was obvious in may of the cities in southeastern US this year, snow can cause things to grind to a halt. Those cities that have snow removal equipment got things up and functioning much sooner than those cities that did not have snow removal equipment. The risk to manage is the probability of snow versus the cost of purchasing, maintaining, and storing snow removal. Each municipality must evaluate and manage the risk for their particular situation.

Snow removal is just one of the vital services that public entities provide for their citizen population. Of key importance to any public entity is the preservation of services, and the potential liability associated with any disruption or enervating circumstance that prohibits the delivery of that service. Continuity of operations is principle among many government's instituting 'Disaster Planning' or even creating committees and departments solely based on 'Emergency Management.'

Outside of liabilities, municipalities can also incur substantial worker's compensation costs. Most public entities are large employers in the communities that they serve, and each municipality owes a high degree of care when dealing with tax dollars. Thus, providing sound risk management policies with respect to safety, meeting regulatory requirements, employee conduct, etc., can bode well for public entities with regards to saving taxpayer dollars, and thus, having more operating revenue, and further, decreasing taxes on the public.