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Complex Risks

The dawn of the second decade of the 21st century comes in the midst of a transformative time for government. Technological innovations are sweeping society, changing the way we communicate with one another. Globalization is challenging the way government is set up to deal with its citizenry. Mounting

federal debt and the rising cost of entitlement programs are squeezing domestic and national security agencies' budgets. Beneath these sweeping trends, federal agencies continue to struggle with long-standing management obstacles ranging from bureaucratic inertia to contract and project management weaknesses to personnel limitations.

The big crises of the past decade--from the Sept. 11, 2001, terrorist attacks to Hurricane Katrina in 2005 to the financial collapse of 2008--illustrate some of the likely trials and tribulations government leaders will face in the next 10 years.

One challenge will be the need for smart information-sharing across federal agencies. In hindsight, many of the major crises of the past decade seemed foreseeable if only pieces of information from various corners of the government had been brought together. The importance of "connecting the dots" is matched by the difficulty of doing so. Agencies receive tremendous loads of data within their realms of oversight. Knowing which pieces of information need to be connected to other pieces seems to be more of an art than a science. The fact that Sept. 11 was not followed up by another terrorist attack in the United States is a sign that law enforcement and intelligence agencies improved their ability to share the right information at the right time.

Another challenge is effective oversight of federal operations and private sector activities under the purview of federal regulators, both of which are becoming increasingly complex. To get just a snapshot, look at the expenditures so far under the $787 billion economic stimulus package passed in February 2009. Projects range from a Health and Human Services Department contract to collect biospecimens for cancer research to environmental remediation projects at nuclear sites run by the Energy Department. Throughout the budget, money flows to federal contractors, their subcontractors, nonprofits, state governments, the state governments' contractors, universities and many other institutions.

The 2008 financial crisis showed how government has had trouble keeping up with private sector innovations such as the securitization of mortgage debt. A full slate of federal financial regulators did not manage to foresee and forestall the financial sector meltdown that occurred late that year. The complexity of activities like securitization and the rapid globalization of the past few decades that allows such activities to quickly spread make regulatory oversight all the more challenging.

Arcane bureaucratic processes force managers to take their eyes off the big issues they need their agencies to deal with and focus instead on unnecessary bureaucratic distractions inside their organizations. The biggest internal challenge for government is to simplify the lives of federal managers--streamlining hiring processes, reducing pointless paperwork and making it easier for them to connect to the world. That's not an argument for eliminating proper checks and balances on government actions. But it is a call to the chief information officers, chief financial officers, chief human capital officers and other top executives in government agencies to find ways to make federal managers' lives easier, not harder. They've got enough external challenges to confront between

now and 2020.

Brian Friel covered management and human resources at Government Executive for six years and is now a National Journal staff correspondent.

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