A Contingency Theory Perspective on the Risk Management Control System Within Birmingham City Council

Abstract

In recent years the topic of risk management has moved up the agenda of both government and industry, and private sector initiatives to improve risk and internal control systems have been mirrored by similar promptings for change in the public sector. Both regulators and practitioners now view risk management as an integral part of the process of corporate governance, and an aid to the achievement of strategic objectives.

The paper uses case study material on the risk management control system at Birmingham City Council to extend existing theory by developing a contingency theory for the public sector. The case demonstrates that whilst the structure of the control system fits a generic model, the operational details indicate that controls are contingent upon three core variables - central government policies, information and communications technology and organisational size. All three contingent variables are suitable for testing the theory across the broader public sector arena.

Keywords: Risk management, case study, contingency theory

JEL Classification: M40, M46, M48, G34