Getting the Blend Right: Public-Private Partnerships in Risk Management

Abstract

The question of whether there is too much or too little regulation in the United States has driven much political debate for decades. The more important question, though, is not about getting the right amount of regulation but it is about finding the best ways for the public and private sectors to interact. When it comes to managing risk in society, this latter question is necessarily one of choosing between different kinds of structures—or partnerships—between public and private institutions. Sometimes these partnerships are adversarial, as they can be with government regulation. Other times they are seemingly invisible, such as when society relies on private insurance markets to manage risk. Seeing risk management as a question of defining the partnership between business and government yields important insights about how to improve risk management as well as about what can be expected from the more limited, contemporary meaning of public-private partnerships, as reflected in various voluntary governmental programs. This paper elaborates four core factors—interface, incentives, information, and institutions—to be considered when designing public-private partnerships for risk management. These core factors can be used to guide decision-making about how to structure effective relationships between actors and institutions with different, and sometimes competing, goals and interests. Ultimately, how well risk management succeeds will depend on the interactions between the public and private sectors and whether these interactions generate optimal and equitable outcomes for society.

Keywords: Risk management, public administration, government regulation, public-private partnerships, effectiveness, assessment, cooperation, compliance