Oct19

Parliaments must up their game on risk management

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Parliaments must up their game on risk management

The GCF’s Catastrophic Risks Report calls for an entirely new category of risk to be developed. Looking around there are few institutions at the national or global level that are fit for purpose in addressing global catastrophic risk. National parliaments are no exception.

The GCF’s catastrophic risks report calls for an entirely new category of risk to be developed. It is a necessary start. Looking around there are few institutions at the national or global level that are fit for purpose in addressing global catastrophic risk. From the UN Security Council to national contingency committees, few have been able to respond to the accumulation of mega risks our world faces today. National parliaments are no exception.

As most constitutional arrangements hold the executive branch of government operationally responsible for keeping the public safe, parliaments have been given short shrift. Given their vital oversight, budgetary and law-making functions, however, it is high time parliaments came into their own and developed new and innovative approaches to risk management of the catastrophic and global kind.

One need not look too far to see why a new approach is needed. From Syria’s implosion and the rise of IS, to Greece’s meltdown, the Global Financial Crisis and Hurricane Katrina, virtually all of our established risk management institutions have been found wanting. When he became the USA’s secretary for Homeland security, Michael Chertoff, the county’s top risk-management official admitted that authorities had got things wrong. According to him, managing risk was “the fundamental social problem that we face in the 21st century.”

Reflecting on the 9/11 attacks that heralded a fundamental reappraisal of America’s vulnerability, he admitted they had not been a “total surprise” and that officials had “misjudged the risk.” He said “We had report after report that talked about the need to strengthen our homeland security. And with all of that, we did not devote even a fraction of the investment we currently put into homeland security … before September 11.

Hurricane Katrina in 2005 was another wake up call. The authorities had known for a long time that cities below sea level such as New Orleans were vulnerable to powerful storms, but they were caught off guard. Chertoff summarized “It’s clear that government at all levels simply failed to invest in maintaining critical infrastructure such as the levies ... wreaking untold havoc” upon the city and its sitting-duck inhabitants.

The financial crisis of 2008, which began in the US sub-prime housing market and migrated to cause havoc across the world, had similarly been “predicted over a period of years, going back into the 1990s”, according to Chertoff. But “we have not managed to address the risk in a way that prevented what was … a [financial] disaster of the magnitude of a natural disaster and a terrorism disaster.” This led to far costlier action after-the-fact than if a preventative approach to risk had been in place.

We know now that every dollar invested in disaster risk reduction and prevention yields multiples back in benefits in terms of lives saved and infrastructure protected. The Japanese have demonstrated this principle most effectively through early investment in DRR. This foresight resulted in far fewer deaths in the Great Eastern Japan Earthquake & Tsunami of 2011 than could otherwise have been expected from a natural disaster of this magnitude.

For experts such as Chertoff, whose task is to keep the country safe from such events, the problem is that society as a whole has failed to manage risk properly on a forward-looking basis, and institutions have failed to learn from their mistakes. This is why he calls for a “disciplined, risk-managed approach” involving lesson learning from major catastrophes.

Lessons can also be learnt from successful sectoral approaches such as in the aviation and nuclear industries – and increasingly in top-tier mining – where a strong safety culture, policies, protocols and technology have served to dramatically reduce accidents and harm. None of these have arrived at overnight but their history can be salutary for policymakers and legislators seeking to establish more robust frameworks and regimes to protect citizens from harm.

One example of a parliament that did attempt to scrutinize the government’s approach to risk management and societal attitudes to risk and risk aversion, was the UK Parliament. In 2006, the UK House of Lords undertook a study which found that the government did have clear and established principles on risk management:

• openness and transparency—Government will be open and transparent about its understanding of the nature of risks to the public and about the process it is following in handling them
• involvement—Government will seek wide involvement of those concerned in the decision process
• proportionality and consistency—Government will act proportionately and consistently in dealing with risks to the public
• evidence—Government will seek to base decisions on all relevant evidence
• responsibility—Government will seek to allocate responsibility for managing risks to those best placed to control them.

In addition to these general principles, specific steps were identified that should be used in policy appraisal process, such as:
• consider whether market failures or equity considerations point to the need for intervention
• carry out expert risk assessment and assess public concerns
• assess monetary costs and benefits of alternative policy options with explicit recognition of uncertainty about values
• assess non-monetary costs and benefits of alternative policy options; develop and monitor an implementation plan.

Despite a clear framework being in place, however, the question remained whether the framework was properly applied and whether structures and cultures of risk management were aligned.

It is telling that in this (pre-global financial crisis) study there was no identification of financial risk and that ‘societal risk’ was portrayed as too remote or difficult a risk for parliaments to address. It is worth noting in full how ‘societal risk’ – what we could interpret as catastrophic global risk – is defined in this parliamentary review:
Societal concerns or the risks or threats from hazards which impact on society and which, if realised, could have adverse repercussions for the Institutions responsible for putting in place the provisions and arrangements for protecting people, e.g. Parliament or the government of the day. This type of concern is often associated with hazards that give rise to risks which, were they to materialise, could provoke a socio-political response, e.g. risk of events causing widespread or large scale detriment or the occurrence of multiple fatalities in a single event. Typical examples relate to nuclear power generation, railway travel, or the genetic modification of organisms. Societal concerns due to the occurrence of multiple fatalities in a single event are known as societal risk. Societal risk is therefore a subset of societal concerns.

Just in this brief discussion, it is evident that traditional parliamentary approaches to national risk management, let alone global catastrophic risk management, are under-developed and urgently in need of overhaul. As the Katrina and Deepwater Horizon congressional inquiries in the USA show, Congress only became involved after the fact. A pro-active, more forward-looking and less reactive approach to understanding national security and national and global risks by parliaments is long overdue. The siloised and fragmented committee approach to risks - ranging from global health crises to environmental disasters, terrorism and artificial intelligence – in most parliaments, cries out for reform.

Given the inter-dependent nature of our world, it is clear that innovations at the level of national parliaments but be accompanied by innovations in inter-parliamentary dialogue and multi-level cooperation on these issues. Through initiatives such as the GCF, we now have a platform to discuss what is needed and to bring legislators into a forward-looking dialogue to create more responsive and resilient risk management systems. The learning curve is steep but exciting. The gains are manifold. More engaged parliaments and better governance can bring multiple co-benefits in terms of safer, more peaceful, stable and sustainable societies.

Malini Mehra
Chief Executive, GLOBE International – the global network of legislators