Tagarchief: Governance

Fukushima report

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The National Diet of Japan | 2012

The evaluation of the Fukushima Daiichi nuclear disaster in 2011, which was caused by an earthquake followed by a tsunami, is a good example of zooming out from a disaster and learning the lessons. It is a true example of self-reflection because it digs deep into the public ecosystem where government, business, and civic society meet. It is a form of network analysis. The disaster had a major impact on the natural environment and ecosystems. The disaster shocked the entire world.

The National Diet of Japan

The conclusions of the Fukushima Nuclear Accident Independent Investigation Commission were thorough and blistering. They shed light on how attitudes, stakes, and rules and their interdependencies, and the lack of cooperation in peacetime (read: before the earthquake and the tsunami) between organisations related to the public domain, had increased the disaster.

The major conclusions [quote]:

  • In order to prevent future disasters, fundamental reforms must take place. These reforms must cover both the structure of the electric power industry and the structure of the related government and regulatory agencies as well as the operation processes. They must cover both normal and emergency situations. 
  • The TEPCO Fukushima Nuclear Power Plant accident was the result of collusion between the government, the regulators and TEPCO, and the lack of governance by said parties. They effectively betrayed the nation’s right to be safe from nuclear accidents. Therefore, we conclude that the accident was clearly “manmade”. We believe that the root causes were the organisational and regulatory systems that supported faulty rationales for decisions and actions, rather than issues relating to the competency of any specific individual. 
  • We conclude that TEPCO was too quick to cite the tsunami as the cause of the nuclear accident and deny that the earthquake caused any damage.
  • The Commission concludes that there were organisational problems within TEPCO. Had there been a higher level of knowledge, training, and equipment inspection related to severe accidents, and had there been specific instructions given to the on-site workers concerning the state of emergency within the necessary time frame, a more effective accident response would have been possible. 
  • The Commission concludes that the situation continued to deteriorate because the crisis management system of the Kantei, the regulators and other responsible agencies did not function correctly. The boundaries defining the roles and responsibilities of the parties involved were problematic, due to their ambiguity. 
  • The Commission concludes that the residents’ confusion over the evacuation stemmed from the regulators’ negligence and failure over the years to implement adequate measures against a nuclear disaster, as well as a lack of action by previous governments and regulators focused on crisis management. The crisis management system that existed for the Kantei and the regulators should protect the health and safety of the public, but it failed in this function. 
  • The Commission recognizes that the residents in the affected area are still struggling from the effects of the accident. They continue to face grave concerns, including the health effects of radiation exposure, displacement, the dissolution of families, disruption of their lives and lifestyles and the contamination of vast areas of the environment. There is no foreseeable end to the decontamination and restoration activities that are essential for rebuilding communities. 
  • The Commission concludes that the government and the regulators are not fully committed to protecting public health and safety; that they have not acted to protect the health of the residents and to restore their welfare. 
  • The Commission has concluded that the safety of nuclear energy in Japan and the public cannot be assured unless the regulators go through an essential transformation process. The entire organisation needs to be transformed, not as a formality but in a substantial way. Japan’s regulators need to shed the insular attitude of ignoring international safety standards and transform themselves into a globally trusted entity. 
  • TEPCO did not fulfil its responsibilities as a private corporation, instead obeying and relying upon the government bureaucracy of METI, the government agency driving nuclear policy. At the same time, through the auspices of the FEPC, it manipulated the cozy relationship with the regulators to take the teeth out of regulations. 
  • The Commission concludes that it is necessary to realign existing laws and regulations concerning nuclear energy. Mechanisms must be established to ensure that the latest technological findings from international sources are reflected in all existing laws and regulations.
  • Replacing people or changing the names of institutions will not solve the problems. Unless these root causes are resolved, preventive measures against future similar accidents will never be complete.” [unquote] 

The chairman of the research commission of the National Diet report Kiyoshi Kurokawa summarised the conclusions [quote]:

  • The disaster cannot be regarded as a natural disaster. It was a profoundly manmade disaster – that could and should have been foreseen and prevented. And its effects could have been mitigated by a more effective human response.
  • Our report catalogues a multitude of errors and wilful negligence that left the Fukushima plant unprepared for the events of March 11. And it examines serious deficiencies in the response to the accident by TEPCO, regulators and the government. 
  • What must be admitted – very painfully – is that this was a disaster “Made in Japan.” Its fundamental causes are to be found in the ingrained conventions of Japanese culture: our reflexive obedience; our reluctance to question authority; our devotion to ‘sticking with the program’; our groupism; and our insularity.  Had other Japanese been in the shoes of those who bear responsibility for this accident, the result may well have been the same. 
  • Following the 1970s “oil shocks,” Japan accelerated the development of nuclear power in an effort to achieve national energy security. As such, it was embraced as a policy goal by government and business alike, and pursued with the same single-minded determination that drove Japan’s postwar economic miracle. 
  • With such a powerful mandate, nuclear power became an unstoppable force, immune to scrutiny by civil society. Its regulation was entrusted to the same government bureaucracy responsible for its promotion. At a time when Japan’s self-confidence was soaring, a tightly knit elite with enormous financial resources had diminishing regard for anything ‘not invented here.’ 
  • This conceit was reinforced by the collective mindset of Japanese bureaucracy, by which the first duty of any individual bureaucrat is to defend the interests of his organisation. Carried to an extreme, this led bureaucrats to put organisational interests ahead of their paramount duty to protect public safety. 
  • Only by grasping this mindset can one understand how Japan’s nuclear industry managed to avoid absorbing the critical lessons learned from Three Mile Island and Chernobyl; and how it became accepted practice to resist regulatory pressure and cover up small-scale accidents. It was this mindset that led to the disaster at the Fukushima Daiichi Nuclear Plant. 
  • This report singles out numerous individuals and organisations for harsh criticism, but the goal is not—and should not be—to lay blame. The goal must be to learn from this disaster, and reflect deeply on its fundamental causes, in order to ensure that it is never repeated. 
  • Many of the lessons relate to policies and procedures, but the most important is one upon which each and every Japanese citizen should reflect very deeply. 
  • The consequences of negligence at Fukushima stand out as catastrophic, but the mindset that supported it can be found across Japan. In recognizing that fact, each of us should reflect on our responsibility as individuals in a democratic society. 
  • As the first investigative commission to be empowered by the legislature and independent of the bureaucracy, we hope this initiative can contribute to the development of Japan’s civil society. Above all, we have endeavoured to produce a report that meets the highest standard of transparency. The people of Fukushima, the people of Japan and the global community deserve nothing less. [unquote]

Bibliography

The National Diet of Japan (2012). The Fukushima Nuclear Accident Independent Investigation Commission. The National Diet of Japan https://warp.da.ndl.go.jp/info:ndljp/pid/3856371/naiic.go.jp/en/report/

 

Comparative risk analysis of technological hazards (a review)

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Robert W. Kates and Jeanne X. Kasperson | 1983

Hazards are threats to people and what they value, and risks are measures of hazards. Comparative analyses of the risks and hazards of technology can be traced to Starr (1969) but are rooted in recent trends in technological evolution, hazard identification, risk perception, and societal activities.

These trends have spawned an interdisciplinary quasi-profession with new terminology, methodology, and literature. A review of 54 English-language monographs and book-length collections published between 1970 and 1983 identified seven recurring themes:

i. Overviews of the field of risk assessment.

ii. Efforts to estimate and quantify risk.

iii. Discussions of risk acceptability.

iv. Perception.

v. Analyses of regulation.

vi. Case studies of specific technological hazards.

vii. Agenda for research.

Within this field, science occupies a unique niche, for many technological hazards transcend the realm of ordinary experience and require expert study. Scientists can make unique contributions to each area of hazard management, but their primary contribution is in the practice of basic science.

Hazards are threats to people, and what they value, and risks are measures of hazards.

Beyond that, science needs to further risk assessment by understanding the more subtle processes of hazard creation, establishing conventions for estimating risk and presenting and handling uncertainty.

Scientists can inform the discussion of tolerable risk by placing risks in comparative contexts, studying the evaluation process, and participating as knowledgeable individuals, but they cannot decide the issue. Science can inform the hazard management process by broadening the range of alternative control actions and modes of implementation and devising methods to evaluate their effectiveness.

Bibliography

Kates, R. W., & Kasperson, J. X. (1983). Comparative risk analysis of technological hazards (a review). Proceedings of the National Academy of Sciences, 80(22), 7027-7038.https://doi.org/10.1073/pnas.80.22.7027

Starr, C. (1969). Social benefit versus technological risk: what is our society willing to pay for safety?. Science, 165(3899), 1232-1238.

ISO 31000

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The International Organization for Standardization | November 2009

The International Organization for Standardization (ISO) in Genève started in 2005 the development of a guidance standard on risk management. An ISO working group was established to develop a Committee Draft called ISO CD31000. The standard “gives generic guidelines for the principles and the adequate implementation of risk management. It is not intended to be used for the purposes of certification.”

ISO 31000 seeks to provide a universally recognised paradigm for practitioners and companies employing risk management processes, replacing the myriad of existing standards, methodologies, and paradigms that differ between industries, subject matters, and regions. For this purpose, the recommendations provided in ISO 31000 can be customized to any organisation and its context.

In some respects, ISO 31000 is similar to ISO 9000 and other broad-based international standards. Though it is not certifiable, it is a concise and comprehensive statement which can, in a practical sense, contribute to the awareness and implementation of risk management.

COSO Enterprise Risk Management

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Integrating with Strategy and Performance, June 2017

This project was commissioned by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which is dedicated to providing thought leadership through the development of comprehensive frameworks and guidance on internal control, enterprise risk management, and fraud deterrence designed to improve organi- zational performance and oversight and to reduce the extent of fraud in organizations.

Foreword

“In keeping with its overall mission, the COSO Board commissioned and published in 2004 Enterprise Risk Management—Integrated Framework. Over the past decade, that publication has gained broad acceptance by organizations in their efforts to manage risk. However, also through that period, the complexity of risk has changed, new risks have emerged, and both boards and executives have enhanced their awareness and oversight of enterprise risk management while asking for improved risk reporting. This update to the 2004 publication addresses the evolution of enterprise risk management and the need for organizations to improve their approach to managing risk to meet the demands of an evolving business environment.

The updated document, now titled Enterprise Risk Management—Integrating with Strategy and Performance, highlights the importance of considering risk in both the strategy-setting process and in driving performance. The first part of the updated publication offers a perspective on current and evolving concepts and applications of enterprise risk management. The second part, the Framework, is organized into five easy-to-understand components that accommodate different viewpoints and operating structures, and enhance strategies and decision-making. In short, this update:

  • Provides greater insight into the value of enterprise risk management when setting and carrying out strategy.
  • Enhances alignment between performance and enterprise risk management to improve the setting of performance targets and understanding the impact of risk on performance.
  • Accommodates expectations for governance and oversight.
  • Recognizes the globalization of markets and operations and the need to apply a common, albeit tailored, approach across geographies.
  • Presents new ways to view risk to setting and achieving objectives in the context of greater business complexity.
  • Expands reporting to address expectations for greater stakeholder transparency.
  • Accommodates evolving technologies and the proliferation of data and analytics in sup- porting decision-making.

The figure illustrates the framework considerations in the context of mission, vision, core values, and as a driver of an entity’s overall direction and performance.

Sets out core definitions, components, and principles for all levels of management involved in designing, implementing, and conducting enterprise risk management practices.

Readers may also wish to consult a complementary publication, COSO’s Internal Control— Integrated Framework. The two publications are distinct and have different focuses; neither supersedes the other. However, they do connect. Internal Control—Integrated Framework encompasses internal control, which is referenced in part in this updated publication, and therefore the earlier document remains viable and suitable for designing, implementing, conducting, and assessing internal control, and for consequent reporting.

The COSO Board would like to thank PwC for its significant contributions in developing Enterprise Risk Management—Integrating with Strategy and Performance. Their full consideration of input provided by many stakeholders and their insight were instrumental in ensuring that the strengths of the original publication have been preserved, and that text has been clarified or expanded where it was deemed helpful to do so. The COSO Board and PwC together would also like to thank the Advisory Council and Observers for their contributions in reviewing and providing feedback.”

By Robert B. Hirth Jr. (COSO Chair) and Dennis L. Chesley (PwC Project Lead Partner and Global and APA Risk and Regulatory Leader)

2017 COSO ERM: Integrating with Strategy and Performance (Executive-Summary)

Risk Management at the Edge of Three Worlds

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City management in the perspective of ‘risk’

Jack P. Kruf | 2007

In this article, I focus on the specific characteristics of the roles and positions of local authority CEOs and city managers in relation to the three worlds of politics, society, and management. A specific focus on the role of risk management in supporting the CEO, and on the process of discussing these issues, should be made to emphasise that risk management belongs on the strategic agenda and demands a holistic approach.

The “best” job

Some might say it is the most attractive and fascinating job there is: serving as CEO in local public management (or city manager or secretary). Why? Because it is at the very heart of a dynamic society, close to politics and government, at the centre of the world of “power and influence”, and at the top of the management pyramid. This person is at the junction of necessary skills, ambitions, rights, stakes, and interests. He or she is, via society, close to disasters, successes, poverty, and environmental challenges, and, via politics, to elected officials like the mayor and local alderman, but always in close contact with officials in higher government and very close to the professionals within the organisation. Local government leadership is a very exciting job.

“It is clear that risk management should be seen as a core competence for every public leader.”

The CEO is a generalist, not a specialist. One might say that a realistic comparison of the job would be with the decathlon. As with decathletes, the CEO must be well-rounded, competitive, and competent in many areas. 

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Global Risks Report 2007

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World Economic Forum

“At the core of this year’s overview of risks to the global community over the next decade is a fundamental disconnect between risk and mitigation. Expert opinion suggests that levels of risk are rising in almost all of the 23 risks on which the Global Risk Network has been focused over the last year – but mechanisms in place to manage and mitigate risk at the level of businesses, governments and global governance are inadequate. The global economy has been expanding faster than at any time in history – but it remains vulnerable.

Some tactical gains have been made in specific areas of risk mitigation: despite the raised threat of terrorism, cooperation on dealing with the threat continues to improve; fears of a major pandemic outbreak have driven a major effort to upgrade our global preparedness to identify and isolate new diseases; there is a growing recognition of the need to improve access to mechanisms of risk transfer in emerging markets, to allow risks to be priced in a way that allows the potential economic growth of this century to be fully unlocked.

There has also been major improvement in the understanding of the interdependencies between global risks, the importance of taking an integrated risk management approach to major global challenges and the necessity of attempting to deal with root causes of global risks rather than reacting to the consequences.

Climate change is now seen as one of the defining challenges of the 21st century – and as a global risk with impacts far beyond the environment. Effective mitigation of climate change may ultimately have the consequence of improving resilience to oil price shocks in developed countries by moving them from hydrocarbons to alternative energy sources; ineffective mitigation of climate change will almost certainly be a factor in major interstate and civil wars within the next 50 years. The way in which climate change is dealt with at the global level will be a leading indicator of the world’s capacity to manage globalization in an equitable and sustainable way.

But the tactical gains may be illusory and are certainly temporary. The manifestation of any number of global risks in the way described in the plausible scenarios in this report could quickly put those gains into reverse.

Global Risks 2007 suggests two possible institutional innovations that may help mobilize businesses and governments to approach the global risks of the next 10 years. One is the idea of a Country Risk Officer – an analogy to Chief Risk Officers in the corporate world – intended as a focal point for managing a portfolio of risk across disparate interests, setting national prioritization of risk and allowing governments to engage in the forward action needed to begin managing global risks rather than coping with them. The second is to create an avant-garde of relevant governments and companies around different global risks – “coalitions of the willing” – allowing risk mitigation to be a process of gradually-expanding alliances rather than a proposition requiring permanent consensus.

Above all, Global Risks 2007 makes the case for the active engagement of all sections of the international community in dealing with global risks. No one group has the ability to effectively mitigate most global risks. Interdependency implies not just common vulnerability, but a shared responsibility to act.

Download Global Risks Report 2007

Public-Private Sector Risk Management: is there a difference?

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Peter Young | February 2007

Are there differences between risk management in the public and private sectors? As a professor who has spent time in both public administration and business administration programs, I have had several opportunities to think about both sides of the debate. 

Professor Peter Young

On one side, we have those who argue that management is management and that differences in the public and private sectors are modest (“if only government were run like a business”). Opponents of the “management is management” point of view argue that the public sector is so different from the private sector that it is a distinctly separate thing and, thus, requires different knowledge and management skills.

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