THE MODEL OF SUCCESSFUL RISK MANAGEMENT IMPLEMENTATION IN LOCAL

This study was examined and analyzed the factors that influence the success of risk management implementation in the local government. Risk management implementation can reduce fraud in the North Sumatra provincial government. Risk management is not an option but a necessity in public sector organizations especially local governments. The government is expected to make large investments to implement risk management. The population in this study were all internal auditors and budget users in Sumatera Utara Province. This study used all population as samples. Data were collected by questionnaire. Data were analyzed using the Structure Equation Model using the PLS application. The results of this study indicate that Management commitment, quality of human resources and conflicts of interest influence the successful implementation of risk management in local governments. The top managements didn't commit to implementing risk management because of their lack of understanding of the benefits of risk management. There is a tendency for top management to avoid implementing risk management. This can be attributed to the facts nowadays, precisely top management who make fraud.The higher conflict of interest in local government is also a barrier to the successful implementation of risk management. There is a tendency for the executive and the legislature to have different interests with the of the local government objectives, so that the existence of risk management will actually hinder their goals. In addition, human resources in local government have low understanding risk management at all, so as internal auditors. If the expected internal auditor who will supervise units in local government does not understand risk management, how can they be expected to help organizational units to implement risk management? Based on the results of the interview, the regional government hopes that there will be cooperation between the regional government and the Educational Institution to conduct research on the right strategies in implementing risk management. So far the strategy has been applied specifically to banking and financial companies and there is nothing specifically applied to the public sector, especially the regional government