Recovery Risk Management

According to the Implementation Guidance for the American Recovery and Reinvestment Act of 2009 (aka "Recovery Act" or "Economic Stimulus Act") issued to all agencies of the U.S. government, risk management will be a central focus to provide the appropriate transparency and accountability promised by President Obama.  Agencies are encouraged to perform a risk assessment of all programs receiving funding within their purview.  Here is an excerpt from the guidance memo issued by the President's Office of Management and Budget.

For programs that receive Recovery Act funding, agencies should consider the following when assessing risk (note that the following list is intended to be illustrative):

1. Which programs are receiving the most funding;


2. Are program outputs and outcomes clear and measurable;


3. Are existing resources sufficient to achieve program objectives and proper award and management in accordance with statutory and regulatory requirements;


4. Who is (are) the final recipient(s) of funds (e.g., contractor, sub-contractor, state, locality, educational institution);


5. Are existing internal controls sufficient to mitigate the risk of waste, fraud, and abuse adequately;Are there performance issues with (potential) funding recipients; and 


6. Are there leading indicators or lagging indicators (e.g., error measurements) to monitor ongoing program performance?

Agencies should also develop a plan for monitoring and reassessing risk throughout Recovery Act funding availability and project close-out.

Kudos to the President and his staff for utilizing risk management practices such as these to improve the overall effectiveness of the programs receiving the massive amounts of funding.  As taxpayers, let's hope the implementation is successful.