Author: Tilden Watson
Market landscape
By 2028, local government in the UK will look radically different. Local government reorganisation will redraw boundaries, powers will devolve further to mayoral authorities, and a review of local government finance is already underway1. These can bring positive change, but they also sharpen the risks; financial, operational, and reputational, that public bodies must navigate.
The housing sector is already feeling the strain. Ambitious targets under the Planning and Infrastructure Bill, combined with new energy and safety standards, place councils under pressure to deliver more with fewer resources. Education, too, faces turbulence: post-COVID learning loss, competition for places, and research funding constraints threaten long-term stability. Yet, moments of reform also bring opportunity. These shifts give local authorities the chance to modernise, rethink how services are delivered, and build models that are more resilient for the future.
Each sector is different, yet all are bound by the same truth: the public sector is working at the front line of a volatile, uncertain, complex and ambiguous (VUCA) environment.
Wider insight on risk in the public sector
When you step back, the pressures facing councils and public bodies are part of a wider set of trends. The World Economic Forum2 highlights climate shocks, demographic shifts, and technological disruption as defining global risks. In fact, 75% of those risks map directly onto the UK public sector.
Demographics are a prime example. An aging population is driving up demand for adult social care, which now consumes the majority of many councils’ budgets3. As funding is squeezed, more authorities face the risk of issuing Section 114 notices. This trend is already visible and will accelerate without long-term planning for sustainable care models.
Energy reliability is another: the National Risk Register4 highlights our dependence on the National Grid, raising difficult questions about resilience if rare, high impact events occur. Even low-likelihood risks like severe space weather or nuclear miscalculation are not abstract, they test the robustness of frontline services on which millions depend.
In short, risk is no longer a theoretical concept. It is woven into the daily delivery of services. However, recognising these risks early allows organisations to plan differently, invest smarter, and create resilience before the pressure point is reached.
Emerging themes
Comparing global, national and sector-specific risks to highlight the pressures confronting local government:
| WEF report (top risks over two years) | National Risk Register 20254 | Gallagher risk barometer5 |
| Misinformation and disinformation | Pandemic | Financial sustainability |
| Extreme weather events | Severe space weather | Cyber threat |
| State-based armed conflict | Low temperatures and snow | Emerging Govt policy |
| Societal polarisation | Emerging infectious disease | Capacity and resource |
| Cyber threats | Nuclear miscalculation | Social Care challenges |
These risks aren’t confined to future horizons; they are already reshaping decision making across the public sector.
How does ERM help?
With vital services at stake, there is now a clear expectation that Enterprise Risk Management should be embedded at every level. ERM provides a way to translate this web of risks into a framework that can be managed. More importantly, it enables organisations to break out of crisis-response mode and take a proactive structured approach to risk.
ERM builds consensus across leadership teams, clarifies risk appetite, and communicates a consistent message to stakeholders. At a time when confidence and trust are as critical as budgets, ERM is one of the few tools that can anchor stability.
The Gallagher approach
At Gallagher, we see these challenges every day. Our risk barometer makes clear the scale of the challenge: 52% of risks currently faced by local government are rated “red”, beyond appetite and signalling urgent concern. Financial sustainability, capacity pressures and social care challenges dominate the landscape, reflecting the strain public bodies face in stating essential services. The insights come from extensive sampling of risk registers, benchmarking and sentiment analysis across the sector, giving us a clear evidence-led view of where risks are most acute. This means organisations are not alone in facing these challenges, there is a growing body of insight, experience and support to draw upon.
Our approach is hands-on and collaborative, supporting the sector through:
- Assurance reviews (health checks): benchmarking, sentiment analysis and process reviews to give leadership teams clarity on risk results
- Embedding ERM in transition programmes: ensuring the ultimate goals are achieved
- Shaping risk strategies: helping leadership teams define what success looks like and align the whole organisation behind it
One recent example began with a simple but powerful question from a leadership team: “what do we want to gain from ERM?” That single question shaped the entire strategy and created ownership across the organisation.
