Risk of What? Using ERM to Consider National Interests

The field of risk management has expanded from some straight forward applications of risk analysis in limited decision frameworks (understanding hazards and helping to analyze choices around specific problems) to today's broad applications of Enterprise Risk Management (ERM) within organizations, including increasingly within some government agencies. ERM can be an effective way to manage multiple risks within an organization trying to fulfill a specific mission. Can these ERM principles be effectively applied at the next higher level, that is to help a country think about ways not only to protect but also to maximize its national interests? One challenge in risk management is framing the nature of the interests and harms to those interests. Whereas an organization may have a specific mission and express risk in terms of fulfilling that mission, the national interests are less clearly defined and agreed let alone managed within a risk framework. This presentation considers how national interests are defined and how they may be defined within a generalized social welfare framework for a country operating in an inter-dependent international environment and then applies some ERM concepts, including managing risks as a system, to helping a country secure its interests. The "power levers" needed to manage national risks are then considered. Decision-makers can use a framework such as this to help better inform their risk management alternatives.