Economic Development Is a Risk Management Profession
Economic development is often described in the language of growth: job creation, capital investment, new projects, ribbon cuttings. Success is measured in announcements and press releases. Failure, when it happens, is treated as an exception—bad luck, bad actors, or bad execution.
That framing can be misleading.
At its core, economic development is a risk management profession—one practiced in an environment where uncertainty is high, information is incomplete, incentives can be misaligned, and the consequences of failure are personal as well as institutional.
Understanding this distinction matters, because many of the persistent problems in economic development do not stem from poor intentions or weak effort. They stem from unmanaged risk.
The Risk Economic Developers Actually Carry
Economic developers rarely control the outcomes they are judged on.
We do not control global markets, interest rates, technological change, corporate strategy, or supply chains. We also cannot control property owners and their willingness (or lack thereof ) to sell. We cannot control the behaviors of consumers. We often do not control final deal approval, incentive authorization, or long-term compliance enforcement. Yet when a project underperforms—or when an incentive becomes politically controversial—the risk crystallizes around a small number of individuals.
This creates a fundamental asymmetry:
Upside is shared across elected officials, boards, and institutions
Downside is concentrated on staff and leadership
From an economic perspective, this is a classic risk allocation problem. From a professional perspective, it is career-defining.
Why “Safe” Decisions Often Aren’t
In most public settings, economic developers are implicitly rewarded for avoiding visible failure and making short-term wins rather than maximizing long-term value. Think a ‘hunter’ versus a ‘farmer’. This pushes decision-making toward what appears safe in the moment:
Smaller, familiar projects
Conservative incentive structures
Overreliance on precedent and peer behavior
Avoidance of decisions that require nuanced explanation
These choices feel prudent. Politically, they often are. Economically, they can be costly.
The risk that is rarely acknowledged is opportunity cost—the cost of not acting, not adapting, or not reallocating resources in response to changing conditions. Declining competitiveness, eroding tax bases, and missed strategic shifts rarely produce a single headline. They accumulate quietly, over time.
Reframing the Role
If economic development is viewed primarily as growth promotion, then success and failure appear binary: the project landed or it didn’t; the jobs materialized or they didn’t.
If economic development is viewed as risk management, the evaluation changes:
Was risk appropriately identified?
Was downside exposure limited?
Were tradeoffs made explicit?
Was the decision defensible given constraints and information available at the time?
This reframing does not make decisions easier. But it makes them more honest—and ultimately more resilient.
Why This Matters
Many economic developers are not struggling because they lack passion, intelligence, or commitment. They are struggling because the system asks them to manage complex economic risk without naming it as such—and then penalizes them for outcomes they cannot fully control.
Until economic development is treated as the risk management function it truly is, communities will continue to see cautious decisions labeled as weak leadership, and bold but defensible decisions labeled as failures.
This series will explore the risks economic developers face—political, fiscal, institutional, and personal—and why better economics, not more optimism, is the path to better outcomes.
