Table Of Content

Praise for Managing Risk and Performance: A Guide for Government Decision Makers “Doingnothingrarelypreventsariskfrommaterializing.Stanton andWebsterhavegivengovernmentmanagersaclear,comprehen- sive,actionableroadmaptheycanusetoorganizeandmanageto anticipate and mitigate risks that put their missions in jeopardy. Managing Risk and Performance: A Guide for Government Deci- sionMakerstakeslessonslearnedfromeffectiveriskmanagement in the private and public sectors and gives executives a blueprint for using those lessons to bring about a new focus on enterprise riskmanagementinfederalagenciesandotherorganizations.The benefits of this approach are immense. The consequences of inac- tion are potentially catastrophic.” —Robert J. Shea, Chairman, National Academy of Public Administration and former Associate Director for Management at the Office of Management and Budget Managing Risk and Performance Founded in 1807, John Wiley & Sons is the oldest independent publish- ing company in the United States. With offices in North America, Europe, Australia,andAsia,Wileyisgloballycommittedtodevelopingandmarket- ingprintandelectronicproductsandservicesforourcustomers’professional andpersonalknowledgeandunderstanding. TheWileyFinanceseriescontainsbookswrittenspecificallyforfinance and investment professionals as well as sophisticated individual investors andtheirfinancialadvisors.Booktopicsrangefromportfoliomanagement to e-commerce, risk management, financial engineering, valuation and financialinstrumentanalysis,aswellasmuchmore. Foralistofavailabletitles,visitourWebsiteatwww.WileyFinance.com. Managing Risk and Performance A Guide for Government Decision Makers THOMAS H. STANTON DOUGLAS W. WEBSTER Coverimage:©iStockphoto/SoopySue Coverdesign:Wiley Copyright©2014byJohnWiley&Sons,Inc.Allrightsreserved. PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey. PublishedsimultaneouslyinCanada. Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedin anyformorbyanymeans,electronic,mechanical,photocopying,recording,scanning,or otherwise,exceptaspermittedunderSection107or108ofthe1976UnitedStatesCopyright Act,withouteitherthepriorwrittenpermissionofthePublisher,orauthorizationthrough paymentoftheappropriateper-copyfeetotheCopyrightClearanceCenter,Inc.,222 RosewoodDrive,Danvers,MA01923,(978)750-8400,fax(978)646-8600,orontheWeb atwww.copyright.com.RequeststothePublisherforpermissionshouldbeaddressedtothe PermissionsDepartment,JohnWiley&Sons,Inc.,111RiverStreet,Hoboken,NJ07030, (201)748-6011,fax(201)748-6008,oronlineathttp://www.wiley.com/go/permissions. LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveusedtheirbest effortsinpreparingthisbook,theymakenorepresentationsorwarrantieswithrespecttothe accuracyorcompletenessofthecontentsofthisbookandspecificallydisclaimanyimplied warrantiesofmerchantabilityorfitnessforaparticularpurpose.Nowarrantymaybecreated orextendedbysalesrepresentativesorwrittensalesmaterials.Theadviceandstrategies containedhereinmaynotbesuitableforyoursituation.Youshouldconsultwitha professionalwhereappropriate.Neitherthepublishernorauthorshallbeliableforanyloss ofprofitoranyothercommercialdamages,includingbutnotlimitedtospecial,incidental, consequential,orotherdamages. Forgeneralinformationonourotherproductsandservicesorfortechnicalsupport,please contactourCustomerCareDepartmentwithintheUnitedStatesat(800)762-2974,outside theUnitedStatesat(317)572-3993orfax(317)572-4002. Wileypublishesinavarietyofprintandelectronicformatsandbyprint-on-demand.Some materialincludedwithstandardprintversionsofthisbookmaynotbeincludedine-booksor inprint-on-demand.IfthisbookreferstomediasuchasaCDorDVDthatisnotincludedin theversionyoupurchased,youmaydownloadthismaterialathttp://booksupport.wiley.com. FormoreinformationaboutWileyproducts,visitwww.wiley.com. LibraryofCongressCataloging-in-PublicationData: Managingriskandperformance:aguideforgovernmentdecisionmakers/[editedby] ThomasH.Stanton,DouglasW.Webster. pagescm.—(Wileyfinanceseries) ISBN978-1-118-65814-7(hardback)—ISBN978-1-118-84176-1(ePDF)—ISBN 978-1-118-84180-8(ePub)—ISBN978-1-118-70423-31(oBook).Riskmanagement. 2.Governmentexecutives.I.Stanton,ThomasH.,1944–II.Webster,DouglasW.,1948– HD61.M2642014 352.4—dc23 2013041081 PrintedintheUnitedStatesofAmerica 10987654321 Tomyfather,Henry,andthememoryofmymother,Ursula,withgratitudefortheir beingrolemodelsofstrengthandintegrity;tomywife,Marty,withthanksforher loveandsupportovertheyears;andtoourwonderfulchildren,Benjaminand Joshua,anddaughter-in-law,Mirah,whoareblazingtheirownremarkabletrails. —TomStanton ••• Tomyparents,BillandLorraine,whogavemethevaluesIsharetoday;tomywife, Connie,whohasmadelife’sjourneyadeeplysatisfyingadventure;andtomy daughters,KathyandDawn,whohavemadethejourneyworthwhile. —DougWebster