OECD Workshop: Learning from crises and fostering the continuous improvement of risk governance and...

Department of the Prime Minister & Cabinet, New Zealand 1

“Learning from Crises and Fostering the Continuous Improvement of Risk Governance and Management”

Oslo, 18 September 2014

Lessons Learned from Recent Crises in New Zealand

Patrick Helm Department of the Prime Minister & Cabinet

Department of the Prime Minister & Cabinet, New Zealand

Outline

1. Lessons

2. Insights

3. Practice


Main Theme

Greater allowance for uncertainty


and . . .

for ambiguity for complexity

for poor assumptions for misunderstandings

for ignorance, arrogance, naivety, etc


Consider Global Events Last Year (2013) . . .

Typhoons: Bopha, Southern Philippines; Haiyan, Philippines/Vietnam (>5000 dead) Health: Cholera, Democratic Republic of the Congo; H7N9 virus in China Displacement: Syria, > 4 million displaced Earthquakes: Balochistan, Pakistan; Bohol, Philippines; Lushan, China Buildings: fire in Brazil nightclub; clothing factory collapse, Bangladesh (1129 dead) Shipwrecks: 24 major maritime incidents; ferry sinkings; migrant vessels Aircraft Accidents: >20 crashes Train derailments: high speed train crash in Spain Terrorism: >200 incidents; >6000 deaths Floods: many Infrastructure failures: Industrial accidents: Chemical spills: etc


and, on 15 February 2013 . . .


Characteristics of Events in 2013

1. Significant crises

2. Unusual sources

3. Surprises

4. Repeats

5. Inadequate mitigation

6. Disproportionate impacts

7. Urgency

8. Rationalization


Lessons from Recent Crises in NZ

• Pike River Mine explosion: 19 November 2010 • Container ship Rena grounding : 5 October 2011

• Christchurch Earthquakes: Mag 7.1 on 4 Sept 2010 Mag 6.3 on 22 Feb 2011 . . . and > 14,000 since


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Lessons from Recent Crises in NZ

• Pike River Mine explosion: 19 November 2010 • M V Rena grounding : 5 October 2011

• Christchurch Earthquakes: Mag 7.1 on 4 Sept 2010 Mag 6.3 on 22 Feb 2011 . . . and > 14,000 since Each event was subsequently reviewed (formal processes; many lessons; revised procedures)


Pike River Coal Mine Explosion

29 men died


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M V Rena grounded on Reef


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Who would have expected . . . . .


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Christchurch, New Zealand . . . .

• series of quakes started in Canterbury on 4 September 2010 • strong vertical upwards shock under city of

Christchurch on 22 February 2011 • over 14,000 earthquakes in the past four years


Two Subduction Zones


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More than 14,000 earthquakes since September 2010


Christchurch at the moment of 6.3 earthquake, 12.51 pm 22 February 2011


185 deaths

$50 billion (>20% GDP)

Massive societal disruption


Other earthquakes in NZ


Napier Earthquake 1931

Magnitude 7.8 256 deaths Led to new building standards, which became a major factor in limiting the deaths injuries and destruction in Christchurch. Led to the establishment of a national earthquake fund


Lessons from Christchurch Earthquake


Lessons: People

Population losses can create a Vicious Cycle (so, minimize evacuations) Over-reaction to the primary event can cause a “second disaster” Business Continuity Planning must take account of human behaviour Trust and empowerment are essential, and matter more than ‘heroes’ Support the private sector in managing supply chain issues Resilient organisations survived best, and then contributed to recovery Disasters create opportunities to transform businesses; winners and losers


Lessons: Communities

The success of the emergency response was due to the resilience of communities in Christchurch

Most rescues were made by people close by. (Help for those in need was mostly provided by neighbours, existing community groups such as churches, or by voluntary organisations. Emergency management needs to be community-centred.)

Individuals, organisations and communities have to own and be responsible for their own preparedness. Social capital is more important for response and recovery than financial

capital, and depends mainly on the ethos and culture of organisations


Lessons: Infrastructure

Resilient infrastructure is vital - particularly underground services Prior planning is crucial to building resilience in life-lines The costs of seismic risk reduction and readiness in Christchurch have been repaid many times over The three main elements that contributed most to resilience:

– Asset awareness and risk reduction – Readiness – Perseverance

New Zealand’s building codes and standards came out well.


Lessons: Risk Transfer

Risk transfer can help, but insurance can only work as part of a wider set of measures to manage risk and strengthen resilience

The Christchurch experience has brought about a shift in thinking in the insurance industry:

– from funding people to recover from loss, to helping them manage their risks

There needs to be a more sophisticated understanding of insurance's role in overall risk management in society For the future the role of insurance in New Zealand’s overall risk management, and the balance between the responsibilities of central government, local authorities, and home-owners, will depend critically on reducing uncertainties in the twin issues of Pricing and Underwriting


Lessons: Strategic

Limits to knowledge about hazards or threats can create huge surprises The cumulative problem can be much greater than, and manifestly differently from, the sum of the individual impacts

Systemic interactions can cause totally unexpected effects There can be diminishing returns from planning, past a certain point Innovation, flexibility and adaptive management were critical, and so there must be a willingness within organisations to reset policies quickly

Disaster planning needs fundamental new thinking to address inherent limitations in both knowledge and methodologies


Implications

Recent experiences have reaffirmed for NZ the importance of approaching crisis management in a structured way: • taking a systems approach to managing risks, reducing vulnerabilities and building resilience within the same framework

• having comprehensive analysis of hazards/threats and vectors of harm

• using formal integrated risk management strategies, eg, 4Rs (or PPRR)

• acknowledging vast uncertainties in dynamic and stochastic behaviours

• building resilience to deal with complex or unanticipated situations

• having prior arrangements for adaptive management in crises.


Systems Planning

As a general strategy for dealing with new, complex, or unanticipated issues:

1. Manage the system as a whole

2. Mitigate discrete risks

3. Build system resilience

4. Adaptive management in response


Arguable Propositions

• Crises that really matter are least known • Utility of training declines with complexity • Training value is lost quickly through staff churn • Communities don’t learn well or retain lessons • Interrelationships matter in system responses • Reductionism over-simplifies inter-relationships • Community culture and organisational ethos matter • Invest ahead to foster adaptive capacity


Potential new risks . . .

Focussed training and narrow exercising can lead to: – stereotyping of crises – distorted judgements – dogmatism and single-perspective – disenfranchising of professionals – encouraging false confidence – take-over by command and control advocates – simplistic responses to complex issues


Overarching Lessons

• Distinguish exceptional from routine

• Greater allowance for uncertainty and complexity

• Pre-agreed governance arrangements

• Principles & guidelines (not rules or SOPs)

• Balance between proactive and reactive investment

• Risk management and resilience


And what is your wish for the world?


Peace ! (1965)


1977 Harmony !

(1977)


Happiness! (1995)


Resilience! (2014)


Overarching Lessons

• Distinguish exceptional from routine

• Allow more for uncertainty and complexity

• Pre-agreed governance arrangements

• Principles & guidelines (not rules or SOPs)

• Balance between proactive and reactive investment

• Risk management and resilience


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OECD Workshop: Learning from crises and fostering the continuous improvement of risk governance and...

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