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Risk governance deficits and emerging risks

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Risk governance deficits and emerging risks

Risk governance deficits and emerging risks


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  • 1. Risk governance deficits and emerging risks IDRC 2 June 2010 Chemin de Balexert 9, CH – 1219 Châtelaine, Geneva, Switzerland | tel +41 (0)22 795 17 30 fax +41 (0)22 795 17 39 | www.irgc.org
  • 2. Systemic risks Fisheries management The collapse of stocks of cod in the Canadian Grand Banks, blue-fin tuna in the Mediterranean and herring in the North Sea all illustrate the multiple challenges of dealing with the “Tragedy of the Commons”. Climate Change Climate change is the outcome of decisions made, deliberately or not to increase GHG emissions in favour of economic development. Its consequences on issues such as water cycle, droughts, agriculture, sea level rise, ocean acidification and other issues of concer are largely systemic Hurricane Katrina In August 2005 weather warnings persuaded the Governors of Mississippi and Louisiana to declare states of emergency on Friday 26th, but the mayor of New Orleans did not order evacuation until Sunday 28th. Katrina hit the following day. FEMA did not have sufficient organisational capacity to respond effectively.
  • 3. Risk governance
    • Core Risk Governance Process
    • Risk assessment
    • Risk evaluation
    • Risk management
    • Communication
    • Organisational Capacity
    • assets
    • skills
    • capabilities
    • Actor Network
    • politicians
    • regulators
    • industry/business
    • NGOs
    • media
    • public at large
    • Social Climate
    • trust in regulatory institutions
    • perceived authority of science
    • degree of civil society involvement
    • RISK CULTURE
    • Political & Regulatory Culture
    • different regulatory styles
    : the role of context
  • 4. What are risk governance deficits?
    • Risk governance deficits are deficiencies (when key elements are absent) or failures (when actions are not taken or prove unsuccessful) in the risk governance process.
    • They weaken the overall process. They can (and do) recur.
    • One way for risk practitioners to improve the governance of risks is to identify and remedy deficits in the risk governance processes of which they are a part.
  • 5.  
  • 6. A5 Evaluating the acceptability of risk
    • A risk’s acceptability is a judgement based on values and how people balance anticipated risks and benefits
    • People and organisations need to define, inter alia, their risk appetite and level of tolerance for each risk
    • Many factors influence the acceptability of risk, such as:
      • Is it incurred voluntarily, or is it imposed?
      • Is the risk familiar or unfamiliar?
      • Is it controllable by personal action or only through collective action?
      • Does it disproportionately impact on the poor, or on children?
    Radioactive waste disposal Equity considerations (both intra- and inter-generational) are important when assessing risks relating to the siting of hazardous facilities. Objections by 3 US states to storing all US LLRW led to the Federal Low-Level Radioactive Waste Policy Act (1980) which had the effect of increasing the number of people at risk from LLRW disposal facilities. Failure to consider variables that influence risk acceptance and risk appetite
  • 7. A10 Assessing potential surprises
    • No-one can reliably anticipate the future; there will always be surprises and unexpected events
    • Unknowable risks will be subject to deficits in their assessment until it is understood that their existence is NOT predictable, that they cannot be characterised, measured, prevented or transferred
    • This situation will not be resolved by more sophisticated tools to model risk
    • Instead, what is needed is lateral thinking, creativity and the capacity to deal with surprises when they occur
    9/11 “ We were trapped by our own paradigm… programs to handle the endless sequence of hijackings and hostage takings…a “book” was devised and experts trained…the premise was that the hostage takers wanted something negotiable; this time, all they wanted was our lives.” David T. Jones Failure to overcome cognitive barriers to imagining events outside of accepted paradigms (“black swans”)
  • 8.  
  • 9. B13 Acting in the face of the unexpected
    • For many reasons, risk managers may be unable to act in the face of the unexpected
    • Skills and resources suited to prior emergencies or well-known risks may be insufficient for dealing with new threats
    • Managers may delay or fail to change from routine to crisis management
    • There may be an absence of authority to reallocate resources
    • An emphasis on efficiency makes it difficult to retain slack resources or build redundancies and resilience into systems
    The Millennium Bug Dire consequences were predicted from the possible failure of computers to deal with date-related data between 31 December 1999 and 1 January 2000. Millions were spent checking and upgrading computer systems, but no problems were reported. However, work done to prepare for “Y2K” may have added resilience to systems so as to allow the New York infrastructure to function after 9/11. Insufficient flexibility in the face of unexpected risk situations
  • 10. Challenges …
    • Address the uncertainty challenge
    • Embrace risk taking and risk aversion
    • Adapt rules and regulations to new circumstances
    • Cultivate trust through communication
  • 11. Contributing factors to fertile grounds for risks to emerge IDRC 2 June 2010 Chemin de Balexert 9, CH – 1219 Châtelaine, Geneva, Switzerland | tel +41 (0)22 795 17 30 fax +41 (0)22 795 17 39 | www.irgc.org
  • 12.
    • Scientific Unknowns
    • Loss of safety margin
    • Positive feedbacks
    • Varying susceptibility to risk
    • Conflicts of Interest, Values and Science
    • Social Dynamics
    • Technological Advances
    • Temporal Complications
    • Communication
    • Information Asymmetries
    • Perverse Incentives
    • Malicious Attacks
    Contributing factors to ‘fertile ground’ for risk emergence
    • Role of complexity
    • Systems perspective
  • 13.
    • Thank you
    • www.irgc.org