BOOSTING RESILIENCE THROUGH

INNOVATIVE RISK GOVERNANCE

OECD High Level Risk ForumPublic Governance and Territorial Development Directorate

Catherine Gamper, RUSI, London November 13

Resilience is…

… the capacity of a system to absorb disturbance and reorganise

while undergoing change so as to still retain essentially the same

function, structure, identity, and feedbacks.

Source: OECD (2014). Boosting Resilience through Innovative Risk Governance. OECD Publishing, Paris.

• Past decade: USD 1.5 trillion in economic damages from man-made disasters (industrial accidents, terrorist attacks) and natural disasters (primarily storms and floods)

Why boosting resilience matters

250

300

350

Ann

ual econo

mic losses in USD billion

Economic losses due to disasters in OECD and BRIC countries, 1980-2012 (USD Billion)

0

50

100

150

200

250

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Ann

ual econo

mic losses in USD billion

Source: EM-DAT: The OFDA/CRED International Disaster Database, Université catholique de Louvain, Brussels, Belgium, www.emdat.be

(accessed 14 November 2013).

• Driven by significant increase in intensity and complexity:

o Increased concentration of populations , especially elderly, more vulnerable groups, and economic assets in risk prone areas

o Accelerated urbanisation

o Increased global economic integration, facilitated by transport mobility and communication

o Deteriorating environmental conditions coupled with climatic changes

Why boosting resilience matters

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Australia

Austria

Belgium

Can

ada

Czech

Rep

ublic

Den

mark

Finland

France

German

y

Greece

Hun

gary

Icelan

d

Irelan

d

Italy

Japa

n

Korea

Luxembo

urg

Mexico

Nethe

rlands

New

Zea

land

Norway

Polan

d

Portuga

l

SlovakRep

ublic

Spa

in

Swed

en

Switzerland

Turkey

UnitedKingd

om

UnitedStates

OECD Total

% of population aged 65 and over

2009 2050

Source: OECD (2009), OECD Factbook 2009: Economic, Environmental and Social Statistics.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Luxembo

urg

Korea

Czech Rep

.

Slovak Rep

.

Irelan

d

Belgium

Nethe

rlands

Hun

gary

Finland

Austria

Swed

en

Eston

ia

Norway

Slovenia

Switzerland

Chile

Portuga

l

Den

mark

Israel

German

y

Polan

d

Japa

n

France

Australia

Greece

United Kingd

om

Mexico

Spa

in

Italy

United States

Turkey

Can

ada

New

Zea

land

Global value chain participation index

Source: Mirdoudot, S. and K. De Backer (2012), “Mapping Global Value Chains”.

• Some disasters caused economic losses in excess of 20% of GDP

(Chile, NZ), with local economies especially affected

Why boosting resilience matters

5%

10%

15%

An

nu

al R

eg

ion

al

GD

P g

row

th

to p

rev

iou

s y

ea

rThe impact of disasters on local economies

• Shocks propagate across economic sectors and geographic boundaries through interconnected economies

• Considerable uncertainty challenges good policy making for resilience

-10%

-5%

0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

An

nu

al R

eg

ion

al

to p

rev

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s y

ea

r

Abruzzo Queensland New York

9/11 AttacksL‘Aquila Earthquake

6/4/2009

Queensland

Flooding

2010/11

Source: OECD (2012), Large regions, TL2: Demographic statistics, OECD Regional Statistics (database), accessed on 14 November 2013, doi: 10.1787/data-00520-en

• Improved disaster risk management framework

conditions:

o General level of social and economic welfare

o Facilitating institutional environment

• Concrete and successful disaster risk management

OECD countries have made substantial progress in achieving resilience…

• Concrete and successful disaster risk management

measures:

o Increased understanding of risks

o Central government leadership

o Mainstreaming of disaster risk management across public policy areas

o High level of risk awareness and information sharing

High income countries are still exposed to

considerable economic damages

Source: EM-DAT: The OFDA/CRED International Disaster Database, www.emdat.be - Université catholique de Louvain - Brussels - Belgium; OECD (2013),

“Gross domestic product (GDP) MetaData : GDP per capita, US$, constant prices, reference year 2005”, National Accounts OECD Statistics Database,

accessed on 14 November 2013, http://stats.oecd.org/

Significant gaps are made apparent during disasters…

Storm Surge, Norfolk, United Kingdom, December 2013

… In protective infrastructure and its maintenance

(e.g. dam breaks during floods in 2002/13 in

Europe; great infrastructure destruction during

Great East Japan Earthquake in 2011)

Revealing resilience shortcomings …

… Lagging regulatory reforms

(e.g. building codes that are not adapted to new housing design -

in Italy L’Aquila 2009; rigidity in air safety regulations during

volcanic eruption in Iceland 2010)

… Lagging enforcement of regulations

(e.g. significant increase in population around the Vesuvius despite

known hazard exposure; informal construction of houses in Mexico

in risk-prone areas)

… Private sector–gaps in business continuity planning

(e.g. large bankruptcy rate during Great East

Japan Earthquake 2011; UK floods 2007 –

average of 9 days of interruption);

… Individual households do not invest sufficiently in self-protection

Also among non-governmental stakeholders

… Individual households do not invest sufficiently in self-protection

(e.g. 84% of population affected by UK floods 2007 believe nothing

they can do to protect better; only a fifth of population of Istanbul

took protective action after the Marmara EQ in 1999; in Germany

only 25% of HH insured against flood risk)

… Low levels of international collaboration

(e.g. lack of incentives to share information; lack of appreciation of

benefits of joint investments; diverging capacity levels across borders)

Trust in government put to particular test during disasters:

o previous neglects in resilience measures have had disproportionately negative effects on trust in government

o Governments and companies have to

… undermining trust in public institutions

o Governments and companies have to react with drastic measures to restore trust (e.g. resignation of government officials in charge)

o and implement expensive spending measures, clean-up costs and compensation funds (e.g. Deepwater Horizon)

Source: BP (2014), "BP ADS Share Price History", British Petroleum, http://ir2.flife.de/data/bp/hpl_us.php(accessed 8 April 2014); McDermott, M. (15 November 2012), “BP will pay biggest criminal fine in US history for Gulf oil spill”, Treehugger, www.treehugger.com/energy-disasters/bp-will-pay-biggest-criminal-fine-u-s-history-gulf-oil-spill.html.

• Constrained resources

• Lack of awareness (households, private sector

etc.)

• Limited knowledge of resilience measures

Why do resilience gaps persist?

• Limited knowledge of resilience measures

among stakeholders

• BUT shortcomings in risk governance may be

an important and often overlooked aspect

→ Risk governance mechanisms determine whether an actor participates in putting resilience measures in place; for example:

o Households may decide not to self-protect in expectation of governments doing so for them

o Local governments may not build protective measures

Why do resilience gaps persist?

o Local governments may not build protective measures as result of other jurisdictions benefiting but not contributing to the costs

o Central government actors reluctant to invest in resilience – ex-ante investments not visible and levels of rewards low

o Countries may not collaborate because of disincentives for data-sharing

o …

Objective: Ensure that governments develop

robust frameworks for the governance of

The OECD Recommendation on the

governance of critical risks

How to address governance gaps?

robust frameworks for the governance of

critical risks and their resilience to major shocks

Adopted by the OECD Ministers in May 2014

Contribution to international debate

Source: OECD (2014), Recommendation of the Council on the Governance of Critical Risks

« Establish and promote a comprehensive, all-hazards

and trans-boundary approach to country risk

governance to serve as the foundation for enhancing

national resilience and responsiveness»

Principle 1: A holistic approach to risk management

• National strategy for governance of critical risks

• Leadership, roles and responsibility

• Whole-of-government – aligning priorities

• Whole-of-society - PPP

Principle 2: risk assessment, foresight, financing frameworks

« Build preparedness through foresight analysis, risk

assessments and financing frameworks, to better anticipate

complex and wide-ranging impacts»

• Capacities for risk assessment and foresight

• Linkages with capabilities planning

• Ex-ante financing mechanisms for contingent liabilities

– G20/OECD framework on risk assessment and financing

« To raise awareness of critical risks to mobilise

households, businesses and international

stakeholders and foster investment in risk

prevention and mitigation »

Principle 3: Whole-of-society approach for prevention

• Risk communication and culture (2 ways)

• Mix of structural and non-structural measures

• Business continuity (focus on critical infrastructures)

« Develop adaptive capacity in crisis management by

coordinating resources across government, its agencies

and broader networks to support timely decision-making,

communication and emergency responses »

Principle 4: Strategic Crisis Management

�OECD network of Strategic Crisis Managers

« To demonstrate transparency and accountability in risk-related decision making by incorporating good governance practices and continuously learning from experience and science »

Principle 5: Good governance in risk decision-making

• Transparency and accountability in risk management decisions, based on knowledge and communication

• Trade-offs decision informed by the full risk portfolio

• Feedback mechanisms and continuous improvements

�Fostering trust in government and in public institutions

• Assess progress, achievements and existing challenges across OECD countries in designing and implementing DRR strategies to close resilience gaps

• Concretely inform the improvement of institutional frameworks by analysing different country contexts

Study will be conducted by looking at:

How does this play out in practice ?

Towards an OECD comparative study on resilience

• Study will be conducted by looking at:– Concrete resilience case studies adopting a bottom up

approach

– Core institutional frameworks

– Prioritisation and financing of disaster risk prevention

– The role of non-governmental actors

– The role of international collaboration

For further information please contact:catherine.gamper@oecd.org