This document summarizes a workshop on risk governance deficits and emerging risks held by the International Risk Governance Council (IRGC) in 2010. It discusses examples of systemic risks like SARS, Hurricane Katrina, and fishery collapses to illustrate risk governance failures. It also outlines IRGC's risk governance framework and defines risk governance deficits. Further, it analyzes factors that can contribute to "fertile ground" for new risks to emerge, such as scientific unknowns, loss of safety margins, conflicts of interest, social dynamics, and malicious attacks.

1. Workshop Risk governance deficits and emerging risks IDRC- GRF 1st June 2010 Marie-Valentine FLORIN Belinda CLEELAND www.irgc.org 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 SARS – from civet cats in China, to Toronto First reported in China in early 2003, SARS infected 8096 people in 27 countries; 774 died. Apart from grave harm to health, SARS led to severe economic impacts in Toronto (Canada), on airlines with routes in the Pacific region (eg Qantas), and up to 90% reductions in Chinatown restaurant business (in the US). 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. 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

6. Conventional risk handling Assessment Management Communication Understanding Deciding What needs to be said about the risk The decisions and actions needed to prevent, mitigate or adapt to the risk The knowledge needed for assessing the probability / potential severity of the risk Conventional risk management is normally based on these three components

7. IRGC’S risk governance framework Pre-Assessment Characterisation and Evaluation Appraisal Management Communication Categorising the knowledge about the risk Understanding Deciding Getting a broad picture of the risk Scientific assessment PLUS Concern assessment Is the risk tolerable, acceptable or unacceptable? Is the risk simple, complex, uncertain or ambiguous?

8. IRGC’S Risk Governance Framework Pre-Assessment Characterisation and Evaluation Appraisal Management Communication Categorising the knowledge about the risk Understanding Deciding

10. Risk governance deficits, Cluster A Understanding: Assessing risks Allocation of deficits to the left or right side of this figure may be subject to interpretation, but intends, here, to focus on the main characteristics of each deficit. A10 in particular could be considered to include elements of both objectives and criteria. Need for early warning systems (A1) Need to acquire and develop knowledge Need to get factual knowledge (A2) Need to get knowledge about perceptions (A3) Risk appetite and risk acceptance must be evaluated (A5) Misinterpretation of information must be avoided (A6) Complex systems need to be understood (A7) Rapid or fundamental changes in systems must be recognised (A8) What to achieve with good risk assessment? Objective and criteria for adequate risk assessment: Using formal models (A9) Assessing potential surprises (A10) Involving stakeholders (A4) How to achieve good risk assessment? Tools/capabilities to conduct adequate risk assessment:

14. Responding to early warnings (B1) Designing effective risk management strategies (B2) Acting : Managing risks Commons problems and externalities must be dealt with (B11) Risk management policies must be efficient and equitable (B4) Transparency and confidentiality must be balanced (B8) Time horizons must be reconciled (B7) Side effects of risk management must be anticipated (B6) Developing the capacity to act in the event of the unexpected (B13) Managing fundamental conflicts (B12) Dealing with dispersed responsibilities (B10) Developing organisational capacity (B9) What to achieve with good risk management ? Objective and criteria for effective risk management: How to achieve good risk management ? Tools/capabilities that decision-makers must use/develop: GOAL STRATEGY POLICY REGULATION IMPLEMENTATION Selecting a reasonable range of policy options (B3) Implementing and enforcing risk management decisions (B5) Allocation of deficits to the left or right side of this figure may be subject to interpretation, but intends, here, to focus on the main characteristics of each deficit. B12 and B13 in particular could be considered to include elements of both objectives and criteria. Risk governance deficits, Cluster B

18. Risk Governance Deficits The Response to Hurricane Katrina http://irgc.org/IMG/pdf/Hurricane_Katrina_full_case_study_web.pdf

22. Contributing factors to fertile grounds for risks to emerge IDRC 1st June 2010 www.irgc.org 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