Tagarchief: Public

Emerging Systemic Risks in the 21st Century

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The Organisation for Economic Co-operation and Development (OECD) | 2003

What is new about major risks in the 21st century? Recent years have witnessed a host of large-scale disasters of various kinds throughout the world: hugely damaging windstorms and flooding in Europe and ice storms in Canada; new diseases infecting both humans (AIDS, the Ebola virus) and animals (BSE); terrorist attacks such as those of 11 September 2001 in the United States and the Sarin gas attack in Japan; major disruptions to critical infrastructures caused by computer viruses or simply technical failure.

These are just some of the extremely costly disasters that have struck over the past few years. And yet, it is not just the nature of major risks that seems to be changing, but also the context within which they appear and society’s capacity to manage them. The forces shaping these changes are many and varied. For example, weather conditions appear to be becoming increasingly extreme.

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The Limits to Growth

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Club of Rome | 1972

In March 1972, a report by a group of young scientists at the Massachusetts Institute of Technology (MIT) commissioned by Aurelio Peccei, founder of The Club of Rome, shook the world. The report excels in system thinking and modelling and in that it is more actual than ever.

Today, 50 years after its publication, “The Limits to Growth” is considered one of the most important and controversial environmental books of all time and it continues to influence conversations around sustainability and our continued existence on this finite planet. Below is the story behind this ground-breaking publication.

Published 1972 – The message of this book still holds today: The earth’s interlocking resources – the global system of nature in which we all live – probably cannot support present economic and population growth rates much beyond the year 2100, if that long, even with advanced technology. In the summer of 1970, an international team of researchers at the Massachusetts Institute of Technology began a study of the implications of continued worldwide growth.

They examined the five basic factors that determine and, in their interactions, ultimately limit growth on this planet-population increase, agricultural production, nonrenewable resource depletion, industrial output, and pollution generation. The MIT team fed data on these five factors into a global computer model. Then it tested the model’s behaviour under several sets of assumptions to determine alternative patterns for mankind’s future. The Limits to Growth is the nontechnical report of their findings.

The book also contains a message of hope: Man can create a society in which he can live indefinitely on earth if he imposes limits on himself and his production of material goods to achieve a state of global equilibrium with population and production in carefully selected balance.

The Limits to Growth, 1972 – key messages:

    • With existing policies, the physical limits to growth would likely be exceeded within one generation.
    • The most likely outcome of reaching these limits would be overshooting them, followed by systems decline.
    • The findings, however, also suggested a viable alternative to these outcomes – one in which population growth and material production could be brought into balance with planetary limits.
    • The fourth conclusion was that it would realistically take 50 to 100 years, or even more, to make this alternative outcome a reality.
    • Finally, the team found that every year action is delayed toward reaching the alternative outcome, decreasing the number of options available to avoid overshoot and collapse.

Bibliography

Meadows, D. H., Meadows, D. L., Randers, J. & Behrens, W. W. (1972). The limits to growth: A report for the Club of Rome’s project on the predicament of mankind. New York: Universe Books.

Limits to Growth (digital scan version, source: https://donellameadows.org)

Short History

Brundtland Report

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United Nations | April 1987

The first explicit common reference to sustainable development was in the 1987 Brundtland Report Our Common Future of the United Nations Commission on Environment and Development.

In this report, sustainable development was defined as: “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. In 1987 the need for cooperating on this was high.

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Millennium Development Goals

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United Nations | 2000

One way to improve global governance of society and nature’s public domain is to work on governance codes. Another is to pursue goals on global public policy issues. The United Nations set the Millennium Development Goals (MDGs) in 2000.

In September 2000, building upon a decade of major United Nations conferences and summits, world leaders came together at United Nations Headquarters in New York to adopt the United Nations Millennium Declaration.

They committed their nations to a new global partnership to reduce extreme poverty and set out a series of time-bound targets – with a deadline of 2015. They were the first attempt to formulate global targets and are the predecessors of the Sustainable Development Goals SDGs. 

Download Millennium Declaration.

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/

 

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