Better risk management key for government success in 2025

• Urgent need for integrated risk management 
• Window of opportunity to act is rapidly closing 
• Expected rise in transactional decision-making on the global stage in 2025

SINGAPORE, 25 FEBRUARY 2025. In an era defined by unprecedented disruption and evolving public expectations, the foremost challenge for government and public sector leaders is to navigate the rapidly changing risk landscape without compromising public service delivery or fiscal responsibility. Given the financial pressures and economic uncertainty facing both governments and people, “business as usual” is no longer a viable option. According to a recent EY report, Top 10 Risks for Government and Public Sector in 2025, there is a critical need for integrated risk management to navigate and address the top 10 public sector risks of 2025. 

• Inability to achieve sustainable public finances 
• Weak or unsustainable economic growth 
• Labor shortages and growing work informality 
• Deficient digital capacity and cybersecurity 
• Failure to adapt to a new geopolitical landscape 
• Limited or no supply chain visibility and traceability 
• Low employee resilience hampering public sector talent advantage 
• Failure to close the gap between climate ambition and action 
• Lack of resilience to climate-related shocks 
• Unconnected to constituent experiences and needs 

Government and public sector organizations will need to make a series of difficult and potentially unpalatable trade-offs that are necessary to mitigate risk and prevent larger crises down the line. 

Benjamin Chiang, EY Asean Government and Public Sector Leader, says: 

“Maintaining sustainable public finances is the number one public sector risk globally, a challenge that governments across Asean are also grappling with. This signals the need for a more comprehensive approach to evaluate public spending, moving beyond measuring inputs and outputs to focusing on outcomes. Such an approach ensures that public funds are prioritized for programs and initiatives that deliver long-term value for citizens, which, in turn, strengthens public trust and confidence in government actions. This is especially critical in the current climate, where public funds are shrinking due to geopolitical uncertainty, trade wars, tariffs and rising influence of regional power blocs.” 

Meeting uncertainty with confidence requires integrated risk management

The need for change is not a novel concept for government and public sector leaders. However, the window of opportunity to act is rapidly closing, and maintaining the status quo will exacerbate existing issues. It is likely that disruption will not only persist, but it will also become more interconnected in the foreseeable future. Many of this year’s top 10 risks intersect and impact one another, compounding the complexity of both governing and the challenge of implementing resilient change. 

An increase in transactional decision-making on the world stage is anticipated in 2025, potentially dismantling international agreements, alliances and norms, thereby contributing to instability and economic precarity. This shift could lead to unexpected disruptions in areas such as supply chains, trade and migration. These disruptions, if not effectively addressed or mitigated, could undermine public resilience and erode trust in government. 

Chiang adds: 

“For Asean, climate change and the growing gap between climate ambition and actual action is another major risk plaguing governments. Asean countries are among the most vulnerable to the adverse impacts of climate change, be it rising sea levels, heatwaves, floods or droughts. To address these impacts, Asean governments should work together to set more ambitious emissions reduction targets, establish stronger disclosure requirements and harmonize sustainable financing standards. These efforts could close the investment gap needed to fund sustainable infrastructure and achieve net zero by 2050.” 

Effectively mitigating risk can demonstrate value

The report finds that managing risk can no longer be a siloed activity relegated to annual planning or discussions between high-ranking officials. Public sector leaders, regardless of rank, need to continually evaluate risks on the horizon and engage stakeholders in and outside their organizations to effectively adapt and respond. 

The full report with the top ten risks can be found here.

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Notes to editors

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About Top 10 risks for the government and public sector in 2025

Between July and November 2024, the EY organization collected a variety of inputs to inform the selection on the top 10 risks for the global government and public sector in 2025. EY professionals conducted a horizon-scanning exercise based on the EY Risk Universe™ framework, which divides government and public sector risk into four areas: 

• Compliance threats that originate in policies, regulations or governance 
• Operational threats that impact the processes, systems, people and overall value chain of government organizations 
• Strategic threats that are related to constituents, politics, the private sector and the natural environment 
• Financial threats that stem from volatility in investment, markets and macroeconomic conditions 

More broadly, EY professionals considered these threats in the context of governments seeking to build a better working world by shaping the future with confidence. Based on this analysis, the EY organization identified the key megatrends and signature issues driving risk and the need for strategic transformation in the sector globally. Interviews with EY professionals around the world, along with proprietary and external data, also informed how the EY organization chose the top 10 key risks for this year. Our Top 10 risks for the government and public sector in 2025 ranks each risk based on how likely it is to occur, along with the breadth of its impact should the risk become a reality (in other words, how many governments would be affected).