Climate risk: who is responsible?

Wednesday, 01 April 2020


    Disasters emanating from climate change are becoming more common. Communities need to consider who owns the risk — and who pays for mitigation.

    Australia’s people, economy, institutions and resilience are being stress-tested in real time by wave after wave of disaster triggered by natural hazards and a rapidly changing climate. The crises are on a scale many find impossible to imagine, but which scientists and those in emergency management have long feared.

    During the past three years, I’ve worked with many people across the nation to understand what makes Australia vulnerable and what to do about it. The answer lies in the daily choices, trade-offs and interactions across complex and dynamic systems of society. It also lies in the urgent need to better understand patterns of systemic vulnerability and who owns, creates and pays for the risks. It lies in our ability to see we are part of the problem and need to be part of the solution.

    Fundamentally, what it takes to understand lies in our ability to learn how to manage through uncertainty, so we make good decisions, don’t let ourselves be paralysed and can galvanise our efforts.

    Stepping up

    Disasters accelerate the demand for leadership and services, and sharpen the focus on what we value most. They reveal the character of a nation, its institutions and communities, and remind us, in the words of US research professor Brené Brown, “Social connection gives meaning and purpose to our lives”.

    Disasters teach us where the tipping points and capability thresholds are, where we need to do better and learn more. Above all, they teach us we must learn how to engage with each other and do something.

    Society is looking to its elected leaders, its captains of industry and each other for reassurance, a steadying hand, hope, and direction that can be trusted. Given the extraordinary strain and disruption, it is unsurprising leaders at all levels are finding they can no longer rely on assumptions and the “norms” that have served them to this point. With myriad global challenges, growing population and ageing infrastructure, difficult intergenerational decisions are ahead and we need to be prepared to make tough choices. Directors need to ask themselves how prepared they are to lead in times of uncertainty. Disasters are one of the most poignant ways to evaluate how well we have aligned our regulatory, market and policy incentives to minimise harm and loss across society. They allow us to consider the wisdom of choices and decisions made in the past, and the opportunities to direct that wisdom to risks and opportunities of the future.

    The climate and disaster risk landscape in Australia and globally is shifting quickly. Changes now evident from a warming planet represent the most significant challenge to our prosperity and security. They bring great uncertainty, escalating threats and uncomfortable conversations about the role we each play in either building in future risk or strengthening our resilience. How we behave in these uncertain times matters and this is the thing we have most control over.

    Key questions for boards

    How ready are you and management to lead through turbulent times?

    Are your strategic risk assessment processes capable of assessing systemic risks?

    Do you know which systemic risks you own and how they are managed?

    Have management and your plans been stress-tested?

    Who owns the risk?

    No-one can own myriad risks alone anymore. The risk is shared because we transfer it as part of everyday decisions. But this transfer, associated ownership and accountability is mostly misunderstood or ignored. Often those who can least afford it end up being affected by situations in which they are unwitting participants and bear the brunt of disastrous impacts — emotionally, physically and financially. It is unsurprising socioeconomic costs are growing exponentially.

    As research conducted by the Bushfire and Natural Hazards Cooperative Research Centre found, “Addressing risk ownership is premised on the concept that if risks are not owned, then more than likely they are not being managed; to own the risks, you first need to understand and accept them.”

    Understanding systemic disaster risk is different from understanding emergency risk, however, understanding the relationship between them is vital and understanding what role you and your organisation play is critical.

    To understand this relationship, it is important to recognise there are different worlds of choices and decisions.

    Regulation, policy, strategic objectives This world includes governments, businesses, operators of resources, assets, services and decisions made to deliver shareholder returns, and social, environmental and economic objectives. This world is where society’s risks are created, managed and transferred. It is a product of economics and balancing trade-offs.

    Emergency risk management

    This world includes institutions and organisations with legislated responsibility or involved in dedicated hazard management and specialised emergency and humanitarian service delivery. This world is where harm is experienced. It manages residual risk from the decisions made by others, and is a product of a hazard-based, emergency risk assessment processes.

    Until now, these worlds have operated independently, almost in silos, taking the other as given. In both worlds understanding of the systemic consequence of natural hazards is immature and patchy (although the emergency management world has the clearest understanding of the hazard itself).

    The time has come to synchronise the two worlds of decision-making. This is the only way to reset Australia’s resilience and tackle the big decisions that need to be made about our future. The choices we make and the things of value we trade off matter, and the whole of society must learn how to do it.

    Leaning in

    Responsibilities for disaster risk management and climate adaptation are currently decentralised from national to local levels, which is problematic. Governments should not carry all the responsibility, but they are best placed to create a trusted environment and provide guidance for cohesion and collaboration.

    In April 2018, the government established the National Resilience Taskforce to work with all sectors and design a national direction to underline climate and disaster risk and improve national resilience across Australia. The work of the taskforce is anchored in the Sendai Framework for Disaster Risk Reduction 2015–30, the Sustainable Development Goals and the Paris Agreement, which all work towards a resilient and sustainable society.

    The taskforce produced the National Disaster Risk Reduction Framework (NDRRF) endorsed by all governments); and the Profiling Australia’s Vulnerability report. To support implementation of the NDRRF, a suite of guidance materials for strategic decisions on climate and disaster risk was developed and published in June 2019.

    A national action plan is in development and due for completion in the coming months. This work is the foundation of what to do, how to do it and how to create pathways to navigate deep uncertainty — together. Using the framework as our guidance system, our urgent challenge is to find new ways to understand the changing characteristics of natural hazards and the risks they pose to collective safety, sustainability and prosperity. Further, the rapid and drastic shifts occurring (in the hazards themselves, growing population, ageing infrastructure, geopolitical headwinds, what is in harm’s way and people and things we care about) highlight the urgent need to reform current arrangements and negotiate new ones.

    Governments, boards, CEOs and society must work together to establish a broad understanding of how physical and transitional risks are linked and clustered, and where shocks and triggers set off cascading effects throughout safety, value and supply chains. The UN’s 2019 Global Assessment Report on Disaster Risk Reduction reported, “Traditional understanding of risk can be likened to a view of the Himalayan peaks from above, with a cloud cover that obscures the topography below.

    From above, humans have described and named these peaks of risk as if they are separate and independent, when in fact below the clouds the connections are clear. Significant and influential peaks of risk occur that do not rise to the level of the clouds and currently remain obscured from view, but are nonetheless highly relevant.”

    We all need to heed the evidence that suggests current strategic decision processes are not geared to the challenges we have. We need to think differently, act differently and manage risk differently. We need to lean in and do it together.

    Jillian Edwards MAICD is former member of the National Resilience Taskforce, former director capability/member services at the Australasian Fire and Emergency Service Authorities Council, and founder of Beyond Business as Usual.

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