Stress Testing in Credit Risk Management
In the previous article, we have already studied how expected and unexpected losses are calculated using statistical techniques. However, there are certain events and their associated credit risks which are not captured by the analyses mentioned above. In order to include them in the calculation, another technique called stress testing is used. In this article, […]
Vulture Capitalism: An Introduction
The fall of American giants such as Sears and Toys R Us has brought the focus back on vulture capitalists. People react negatively when they hear about private equity firms who have profited off the misery of other weaker firms. This is the reason why they have coined a derogatory term for the companies. This […]
Risk Management and Stock Market
In stock market there is strong relationship between risk and return. Greater the risk, greater the return generally! In financial terminology risk management is the process of identifying and assessing the risk and then developing strategies to manage and minimize the same while maximizing the returns. Every investment demands a certain amount of risk and […]
Team Work – Meaning and Tips for better Team Work
A single brain sometimes is not capable of taking critical decisions alone. An individual needs the support and guidance of others to come out with an effective solution. When individuals come together on a common platform with a common objective of accomplishing a task, a team is formed. Ideally the team members should be from […]
Evolution of Insurance Regulation
The general public is not very fond of the financial services industry. Whenever any crisis breaks out, the financial services industry is one of the first ones to bear the brunt. The fact that AIG, which is one of the largest insurance companies in the world, needed a bailout during the 2008 crisis does not […]
As the world around us is changing with concomitant changes in politics, business, economics, and society, the field of public administration cannot be aloof from the need to innovate and change.
As the public sector in many developed countries feels the need to move beyond the static and machine bureaucratic paradigm, the public sector in the third world and the developing countries is also in the throes of adapting to the broader changes happening in society.
With the increased awareness among the citizenry and the rapid spread of information along with use of technology and social media, the public sector in the west and the east has to wake up to the new realities and cannot be an ostrich or a fossil among the nimble and agile private sector. This is the key theme of this article that looks at the future of public administration around the world in an era of rapid change. There cannot be a more compelling case for proactive public sector rather than a reactive public sector as the future catches them and they can only survive by adapting to the future.
The Great Recession of 2008 put paid hopes to the public sector in the west as the bureaucrats were suddenly faced with shrinking budgets, downsizing, and a general tendency to squeeze the public sector to get “more bang for the buck”. This meant that the public sector in the west had to innovate to cope with the broader changes in the countries.
Innovation is often defined as the ability to create something new and find newer ways of doing things. This means that the public sector in the west had to find innovative ways to save money, cut down on costs, and generate more returns for their investments.
On the other hand, the public sector in the east had to contend with radical changes as the long-suffering masses who were frustrated with red tape and bureaucrats finally summoned the courage to use technology and protest to fight against them.
Further, many governments in the developing world faced pressure to divest their stakes in the public sector and make the bureaucrats more accountable as they needed to generate funds for the other items on their agendas. The net result of all these pressures meant that the public sector in the east had to change fast as otherwise they would be faced with disruption and obsolescence.
The ways in which the public sector can innovate include using technology more proactively, collaborating and communicating within and with the external world, adopting a more humane approach to administration and attending to the grievances of the citizenry, and most importantly “walking the talk” which meant that they had to not only declare their intent but also have to act accordingly.
In other words, merely having a gazette is not enough and the public servants have to follow it in the spirit of the law as well as the letter of the law.
As for using technology and social media, the public sector and the public managers are gradually taking to IT to communicate and collaborate among themselves as well as with the external world. The other key imperative here is that public sector managers must not initiate a change and then give up midway because of resistance from vested interests and those with hidden agendas. Perhaps the biggest challenge facing public sector managers is that they plan to work but not work to the plan.
In the United States, there has been a lot of criticism on the bureaucrats who were seen as holding up approvals and sanctions to the projects initiated by the private sector.
Further, with outsourcing and Offshoring of many routine activities as well as the use of contractors to get the job done, the public sector in the United States has been forced to embrace innovation and change.
As many experts aver, the government of the future is simpler, leaner, and more nimble rather than the behemoths that they are at the moment. The outcry against big government has reached such a crescendo that the Defense Department in the United States has more or less outsourced almost all peripheral activities and has only retained its core staff for the managerial and the combat functions. This example illustrates how the public sector in the United States is operating in the context of the changing governmental landscape.
The first item for the government of the future would be to remove the opaqueness and the secrecy surrounding its activities and instead embrace accountability and transparency as the motto. For instance, the government of the future is one where the citizenry is made aware of the decisions taken by it rather than hiding under archaic laws and regulations in the name of confidentiality.
Apart from this, the government of the future is one that is proactive instead of reactive where it anticipates the changing trends and responds accordingly instead of knee jerk reactions to events and incidents. This means that the public servants have to be responsive to all the stakeholders including their superiors, the elected representatives, and most importantly the citizenry instead of favoring a particular section over the other.
In other words, the government of the future would be responsive instead of secretive and accountable instead of resorting to blame game, and would be transparent instead of being opaque.
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