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ACCA Strategic Professional · Strategic Business Leader · Public sector governance

A regional health authority is funded by taxation and must deliver services equitably. Its board is assessing the risk that rising demand will exhaust the budget. A board member suggests judging each risk solely by its financial impact on the authority. Which response best reflects the nature of public sector risk management?

The suggestion should be rejected because public sector risk assessment must also weigh non-financial impacts such as patient safety, public trust and political consequences. Public bodies answer to many stakeholders and the public interest, so budget impact alone gives an incomplete picture of risk.

  1. AAgree, because public bodies are accountable only for budget outcomes and not for service delivery
  2. BAgree, because public sector risk should be transferred wholly to private contractors
  3. CDisagree, because risk should be ignored where the government ultimately underwrites losses
  4. DDisagree, because risk assessment should also consider non-financial impacts such as patient safety, public trust and political consequences for multiple stakeholdersCorrect

Explanation

Public bodies serve diverse stakeholders and the public interest, so risks include harm to service users, reputation and legitimacy, not just financial loss. Government backing does not remove the duty to manage risk, and full transfer to contractors is neither always possible nor appropriate, since accountability remains with the public body.

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