By Rumtin Sepasspour, Courtney Tee | August 22, 2024
With crisis bleeding into crisis and global threats increasingly intersecting, governments cannot keep playing risk Whac-A-Mole. Illustration: Thomas Gaulkin / depositphotos.com
Every day, countries face a range of major threats that could cause grave harm. To deal with these threats, governments need to develop strategies, allocate budgets, assign resourcing, agree on priorities and policies, and build a risk culture and capability. But policymakers often don’t care about this nuts and bolts of governing risks that could be catastrophic. Even if they do care on some level, they tend to focus on short-term and domestic priorities and are regularly distracted by the latest twist in the media cycle or internal party shenanigans.
As a result, governments either don’t take on the task of dealing with potentially catastrophic risks or do so poorly.
Unfortunately, an inadequate system of risk governance can have severe consequences. The COVID-19 pandemic was a perfect example of how governments failed to warn or communicate about, prevent, prepare for, respond to, or recover from a known hazard.
Lack of attention is the most important driver of global catastrophic risk—the potential for mass human suffering or death at a global scale. The risk can result from conflict between nuclear powers, highly contagious diseases that could be deadly for humans and animals, climate disruptions and tipping points, and the emerging technologies that empower weapons of mass destruction and undermine democratic institutions.
With crisis bleeding into crisis and global threats increasingly intersecting, governments cannot keep playing risk Whac-A-Mole. They must establish risk governance that treats the full range of global threats. This requires setting up a clear direction and strategy for risk reduction. Each government should appoint a specific role—a chief risk officer, if you will—to take charge of the country’s risk. National governments must also develop processes that assess how their policies both increase and decrease risk. And governments must provide fiscal support to efforts that reduce risk so that they can succeed.
As global risk grows—becoming both more likely and lethal—the slow, and at times boring work of risk governance could mean the difference between catastrophe and survival.
Bringing safety back. When it comes to global catastrophic risk, most governments don’t know how to act. In an article a few months ago, we argued that governments must acknowledge that the level of global catastrophic risk is higher, and escalating more quickly, than they realize. Not since the dangerous heights of the Cold War have governments needed to pay such close attention to humanity-level threats.
To the extent that governments consider risk to a nation, whether home-grown or from abroad, they tend to tackle threats and hazards individually. Issues like terrorism, natural hazards, and homeland defense typically have separate legislation, policies, strategies, and institutions, creating a web of uncoordinated policy.
Beyond political incentives and bureaucratic inertia, there is little rhyme or reason as to why certain threats get more attention over others, or why specific risk reduction policies are given more resources over others.
This haphazard and disjointed approach to managing risk leads to all sorts of problems.
Senior policymakers often cannot see the full picture of threats to the nation. Each agency develops its own risk reduction priorities based on bureaucratic interests. And short-term tunnel vision and sharp shocks focus senior policymakers’ minds on salient issues. As a result, certain threats fall through the cracks. Catastrophic, chronic, or emerging risk often bears the brunt of the risk mismanagement.
Without governance, risk reduction efforts are also more likely to be poorly implemented, and policymakers miss opportunities to come up with more effective strategies across a range of threats. In particular, actions that help protect against multiple threats—like improving food system security, hardening supply-chain resilience, or building emergency response capabilities—tend to be under-rated compared to threat-specific approaches.
Consider the way governments manage risk to the food and agricultural sector. Customs and border agencies oversee the threats of foreign diseases and invasive species entering the country. Environmental agencies focus on the threat of drought or a collapse in fish stocks. Economic agencies worry about supply-chain risk. Security agencies maintain watch for malicious attacks. Emergency managers are responsible for mass feeding in a crisis. But who decides and coordinates the policy of food security? How are authorities, policies, and processes tested and updated? Who evaluates which policies and programs produce the greatest return for the taxpayer dollar? And how are agencies kept accountable?
With no strategic governance, each agency deals with its siloed responsibility, often at cross-purposes with other agencies and competing for budgeting and attention.
Risk governance is the machinery of government that helps guide, coordinate, and oversee risk reduction efforts. It would help set a clear direction and establish priorities and objectives, so agencies are singing from the same song book and understand where they fit in. Risk governance can also help identify and manage the complex tradeoffs between threats and policy actions.
Further, good governance ensures risk is owned. It helps establish effective structures for managing national risk, including global catastrophic risk. Risk owners must be held accountable for their actions, or, more likely, lack of action.
Proper governance also incentivizes and empowers risk reduction. Through financing, training, and risk culture, policymakers and policy practitioners will have the mindset and capabilities for reducing risk.
Ultimately, good governance is the solid foundation, the brick walls, and the strong pillars of a government’s risk reduction efforts. Unfortunately, too often, it is more a case of Tower of Pisa than the Colosseum.
Nobody governs like I govern. With almost continuous global shocks and crises, policymakers must notice that their risk governance efforts aren’t working. Some countries are making moves in terms of governing extreme risk, which should set the tone for more and better efforts. But no nation has yet implemented an effective and holistic risk governance framework, especially one that considers global catastrophic risk.
There is, however, plenty that governments could do. A proper risk governance effort is a simple but well-orchestrated choreography of direction, design, resourcing, and personnel.
First, set a clear direction for reducing national risk, like outlining goals and establishing priorities that will guide how government agencies will deliver. This would start with a “national risk and resilience strategy” that considers all potential risks and hazards of the scale to threaten national interest.
It may be tempting to rely solely on a national security strategy. But these strategies remain an awkward guiding policy when the threat or hazard—like climate change, emerging technologies, and supply-chain disruption—comes from outside the traditional security domain.
The United Kingdom government is an example of a nation leading the way. It has developed a new National Resilience Strategy and is working on a National Resilience Framework that aims to set out “the plan to 2030 to strengthen the frameworks, systems and capabilities which underpin the UK’s resilience to all civil contingencies risks.” Laudably, as part of this plan, “there will be clear ownership of all risks, including complex and catastrophic risks, underpinned by sharpened governance and accountability.”
Next, appoint a “chief risk officer” for the country. This role exists in banks and financial services companies. Why not in governments? After all, governments are the ultimate arbiters and providers of safety and security for their citizens. A national chief risk officer could be responsible for conducting a national risk assessment process, overseeing risk preparedness and resilience, developing strategies to reduce and manage risk, and coordinating responses across government when crises emerge.
The United Kingdom recently created a head of resilience role in the Cabinet Office, the agency that supports the country’s prime minister and cabinet. And while this is a good start, even they need more practice here; the role does not have the weight and authority that a true chief risk officer does. The United Kingdom does, however, benefit from a National Security Council subcommittee on Resilience, which oversees the government’s efforts to prepare for long-term risk and make decisions for how the government should prevent and respond to severe shocks.
From there, policymakers can transition into assessing policy decisions’ impact on risk. Let’s call this technique a “risk impact assessment.” Think of it like an environmental impact assessment. But instead of evaluating the impact of new infrastructure on the environment, it evaluates the impact of new policy on risk. A risk impact assessment would help policymakers see how new policies might directly or indirectly influence risk to the nation.
Then, look at giving risk reduction efforts the fiscal support they deserve. Without money, government agencies are not incentivized or empowered to act. Governments could establish a fund that disburses a predetermined amount to risk reduction proposals. For example, they could build on what Australia is doing with its “Disaster Ready Fund.” Each year, it disburses up around $130 million to its states and territories looking to improve disaster preparedness and response capabilities. While it doesn’t cover all disasters like cyberattacks, pandemics or conflict scenarios, or preventing risk altogether, it’s a start.
If governments really want to spice this maneuver up, they could dedicate a portion of each year’s national budget to policies that reduce national and global risk. They could earmark specific proportions for risk assessment, prevention, preparedness, response, and recovery to make sure each step is financed. And there should be an allocation for reducing global catastrophic risk, so it does not get ignored at the expense of more typical risk scenarios.
Finally, they need a showstopper. Governments could develop “risk-based budgeting,” which would integrate risk considerations across the whole government budget cycle. After all, budgets mean action.
For example, New Zealand considered disasters when developing its “long-term fiscal position,” where the Treasury looks at least four decades into the future. And the Philippines is developing a full-blown disaster risk-based budgeting framework. Take these efforts and broaden them to apply to nationally significant risk, including global catastrophic risk.It would ensure that governments can evaluate the fiscal impact of new legislation, prepare more accurate budgets, forecast shocks to revenue and help manage public assets and utilities.
Until the end of time. Each morning, people wake up to the news about disaster in the world. With so much darkness around the globe, it is easy to get weary and desensitized.
But governments cannot. When others aren’t paying attention and are going about their normal lives, when social media has turned to the next meme, governments cannot get sick and tired of the boring work required to manage risk to the nation.
Take the earlier example of governance of risk to the food system. Recognizing the lack of strategic and coordinated approach, the Biden Administration released a National Security Memorandum in 2022 to outline its policy for ensuring that food and agricultural sector is secure and resilient “in response to the possibility of high-consequence and catastrophic incidents.” The memo assigns roles and responsibilities for specific policies, designates ownership of coordination across government and requires risk assessments and mitigation strategies to be developed. Such governance goes without fanfare or attention. Yet it will help ensure the United States can handle a devasting shock to its food supply.
Apart from these rare instances, there is no question that governments are mostly improvising, from one crisis to the next. Prevention and preparedness are at best, haphazard, and at worst, woefully insufficient. Risk governance would help organize and steer these efforts.
Only a proper, full-throated effort to manage and govern global catastrophic risk will safeguard countries and their people. If governments start now, they might be just in time.
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Keywords: COVID-19, climate change, global catastrophic risk, nuclear weapons, pandemics, risk governance
Topics: Disruptive Technologies