Ready or not? By Judy Hirst

23 Oct 08
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24 October 2008

The global financial turmoil has concentrated everyone's minds on one form of risk, but there are plenty more out there to keep public sector managers awake at night. Public Finance convened a round table of experts to see how prepared they are for any eventuality. Judy Hirst reports

Monday, October 13 was, as it turned out, an auspicious day for a round table event on public sector disaster management. As a high-level team of risk experts gathered in central London to debate 'future-proofing public services', the world waited to find out whether a colossal rescue package had wrenched the global financial markets back from the brink.

In the event Armageddon never arrived, another Meltdown Monday was averted, and everyone breathed a little more freely. But as an exercise in expecting the unexpected, and living with hitherto unimaginable levels of risk, it was a learning experience of the highest order. For the policy-makers and practitioners gathered at the Public Finance event, the financial rollercoaster was a frequent point of reference for the day-to-day challenges they face.

Public services are uniquely exposed when it comes to preparing for both man-made and natural disasters: damned if they appear to exaggerate the risks, but also if they react too slowly when an emergency strikes. This tension between risk preparedness and risk aversion was one of a number of themes explored in a lively, and at times heated, debate.

The round table, hosted in association with Zurich Municipal, brought together leading risk experts from central and local government, think-tanks, the voluntary sector and the insurance industry. Discussion ranged across many forms of risk and disaster management, from floods and pandemics through to foot and mouth, and terrorist threats.

Chaired by local government expert Tony Travers, the pan-public sector gathering heard keynote introductions from John Tesh, deputy director for capabilities at the Cabinet Office's Civil Contingencies Secretariat; Paul Bettison, chair of the Local Government Association's environment board; Lynn Drennan, chief executive of the public sector risk organisation Alarm; and Donald Macrae of the Risk and Regulation Advisory Council.

At the outset, Travers set everyone the challenge of 'evolving a rational political response to risk' at a time of hugely rising – and often contradictory – expectations of government.

'The public expects central and local government to act as “provider of last resort”, guaranteeing that other agencies can cope with risk and act collectively,' he said. But this was often impeded by the complexity of cross-agency partnerships and other governance arrangements, and a serious lack of resources. 'Risk is with us all the time, but how prepared are we for politicians to spend sufficient money on something that is seen to be at a distance, particularly when budgets are tight?'

This dilemma was explored by Lynn Drennan, opening a session on 'the view from the ground'. She argued that research by Alarm and the Audit Commission showed that risk management was 'fairly well embedded' across public sector organisations at an operational level. But it was much more patchy when it came to partnerships, and to strategic planning and internal IT systems. She added that in hard times like these, with looming budgetary cuts, risk funding was 'one of the first areas likely to be cut, when exactly the opposite should be the case'.

Paul Bettison expressed similar concerns. With severe flooding becoming 'the rule not the exception', and local authorities being tasked with preparation for these and other serious emergencies, it was 'strange and perverse' that ring-fenced funding for emergency planning officers had been cut, he said. This summer's report by Sir Michael Pitt into the 2007 floods – the basis for the Floods and Water Bill going through Parliament this autumn – had highlighted the need for far better co-ordination of local emergency forces, Bettison added. 'Local authorities are the first port of call for residents in difficulties yet councils' main role is as “community leader”. They seldom have emergency forces under their own control,' he said.

This, too, throws up financial issues, he pointed out, as putting staffing and budgets under the control of other organisations – and being required in an emergency to overspend – is 'a huge risk in itself'. Even under the government's Bellwin emergency aid scheme for councils, which is meant to provide a guarantee of reimbursement, some authorities have still found themselves out of pocket.

Resource issues naturally loomed large in the discussion of on-the-ground experiences of emergency planning, particularly the ad hoc nature of the departmental funding streams available to deal with major incidents such as floods. But the debate soon widened to cover controversial issues around the role of the media, personal responsibility for risk preparedness and 'the politics of fear'.

Drennan was very worried about the 'knee-jerk reaction' of the media to potential risks such as avian flu. 'As a risk analyst I've been infuriated at some of the irresponsible reporting, and also at the extreme government reaction to the first foot and mouth epidemic,' she said. And Steve Fowler, chief executive of the Institute of Risk Management, warned of 'risk management by the media'.

But John Oxford, professor of virology at the Centre for Infectious Diseases, disagreed. More, not less, public awareness of the perils of risk-taking would have been very useful in the current case of the Icelandic banks' collapse, he argued. And when it came to health protection: 'We have used the power of the press ruthlessly and very effectively. That headless dead swan in Scotland sent out a very important message, and as a result we are one of the most well-prepared nations in the world when it comes to H5N1. And all thanks to the Sun, the Mirror and the rest!'

Ruth Hall, Southwest regional director for the Health Protection Agency, could also see the positive side of heightened awareness of risk. One important way to communicate better to the public was by spelling out the full implication of risks, she argued. 'In the health service, we're very good at identifying threats but not so good at quantifying their impact. The effect of a major emergency like flooding or bird flu can take years to bottom out. We can save a huge amount by prevention. We need to get a handle on the story.'

Swans also reared their heads – metaphorically or otherwise – in the contribution from Charlie Edwards, head of the security programme at the think-tank Demos. Older 'unifying threats', based on a Cold War narrative, had been replaced with a 'spectrum of risks', all competing with each other, he said. 'We're suffering from the so-called “black swan” effect, as we try to learn the lessons from the last major disaster. The trouble is, it prepares us for the last event, but not for the next one.'

With Pitt arguing that flooding should be viewed as on a par with the threat of terrorism, and Liberal Democrat leader Nick Clegg talking of 'an economic 9/11', there was a generalised politics of fear, dating back to the extraordinary events of 2001, Edwards argued.

'Instead of just the flood packs recommended by Pitt, perhaps we need a pack that prepares people for several potential events,' he suggested, only half tongue-in-cheek.

This precautionary principle was to some extent challenged by Fowler, who emphasised that there were positive as well as negative sides to risk, and the importance of taking an 'enterprise wide' approach.

'We've all got to take risks, including in the public sector,' he said, noting that people were often inconsistent in the standards of safety they accepted from, for example, public transport compared with driving in their own cars. The issue of personal versus public responsibility was raised by a number of participants. Some noted that this and last year's floods had highlighted the worrying proportion of uninsured or underinsured households in at-risk areas, particularly in social housing. Bettison, who is also Bracknell Forest council leader, thought he had noticed a hardening of attitudes to this problem in his own area, where a usually generous community had been reluctant to support uninsured flood victims.

He also flagged up the tough decisions that were increasingly having to be made about a 'managed retreat' when it came to, for example, coastal properties that were simply too expensive to defend.

Meanwhile, Anna Fleming, property claims director at Zurich Municipal, raised the question of whether local authorities were having to review their own insurance arrangements in the light of recent flooding events.

Phil Rothwell, head of flood risk policy at the Environment Agency, was perturbed that although there was clearly widespread anxiety about climate change – expressed by increased use of the agency's website – take-up of flood guidance packs remained obstinately low. Other participants reported that getting the public to accept offers of sandbags was proving a challenge.

People urgently needed a reality check, argued Mary Dhonau, chief executive of the National Flood Forum Charity, and clear, basic advice on what to do. Maybe this widespread duvet mentality was just human nature, argued some – or perhaps the consequence of so many competing, ever-more alarming risks? Deborah Fox, director of the public sector programme of sustainable development charity Forum for the Future, was worried that, as in earlier recessions, action on climate change would now be seen as something to be postponed for more affluent times. However, Travers drew attention to the potential 'moral hazard' in expecting government to protect us at all costs – namely, that it encourages the public to relax.

These dilemmas were put into a broader context by John Tesh in a bracing session on 'can the centre hold?' Large-scale catastrophes 'don't tend to happen in the UK', he told us rather reassuringly (while simultaneously touching the nearest available piece of wood). Rather, four years of risk assessment had led the Civil Contingencies Secretariat to identify a large body of 'low to middle-sized risks'.

The pattern, he said, was one of 'regular recurrence of rather unpredictable events'. With the – rather large – exception of the effects of climate change, the risks were 'not that different to those of the past 100 years. Many of the changes were perceptual, with people becoming a lot less tolerant of governments failing to do their job properly.' He did acknowledge, however, that society had become much more vulnerable as the risks became more complex.

The government's 'top three risks', where there was significant potential for catastrophe, were pandemic flu, flooding (particularly of the coastal variety) and 'certain kinds of terrorism'. He contrasted past top-down strategies for dealing with 'simple' risks with today's challenges: especially the need to develop bottom-up ways to tackle complex risks, involving local authorities, the public, private and voluntary sectors and – in particular – local communities.

'Community resilience is central to the government's national security strategy,' he said, even if officials were still struggling a bit with the concept. 'One thing is certain – you have to abandon secrecy and start engaging communities, which is why we publish the national risk register.' All emergencies were ultimately local emergencies, he stressed. But there also needed to be national plans and standards for 'generic capabilities' (blue-light emergency services), business continuity and crisis management – and these were clearly the responsibility of central government.

Donald Macrae provided a rather different take on how 'the centre' should do its job. Before joining the Risk and Regulation Advisory Council, he had been on the board of 'the department of biblical disasters' – otherwise known as the Department for Environment, Food and Rural Affairs – and had experience of fire-fighting foot and mouth, avian flu, bluetongue and other real and imagined threats. Earlier departmental disasters were largely avoided, he said, through much improved planning, but also by more public use of experts, 'rather than grandstanding ministers' – and improved negotiations with the industry.

Macrae was particularly concerned about the way perceived risks can drive public policy, and not always for the good. He said 'tombstone regulation' was a problem, citing measures brought in after the Hatfield train crash, which 'led to more deaths on roads because they resulted in the trains running too slowly'. In general, he argued, 'we're good at identifying risk, but crap at probability.' The current financial market turmoil, in which experts were all at sea, was a clear lesson in how irrational and unpredictable risk events could be.

'How can the public get a better perspective on risk?' he asked – particularly with an army of 'risk entrepreneurs, including insurers and health and safety advisers, fuelling people's fears?' The Risk and Regulation Advisory Council was examining how risk aversion was responsible for an excess of bureaucracy in the police force. He cited other examples of an increasingly risk averse society, such as a surfeit of insurance regulations curbing volunteering.

Andrew Jepp, head of local government at Zurich Municipal, took up the challenge by debunking some common myths for which insurers frequently take the rap (mainly involving conkers in playgrounds). 'There is a real sense of frustration, when in practice we're used to insuring all sorts of high-risk public events – even flaming barrels being rolled down Lewes high street – and paying for things like sprinklers in schools.'

Nevertheless, participants could not resist embarking on a discussion of the many, varied – and presumably uninsurable – risks that we should be averse to: from the impact of nanotechnology, through avian flu and systemic financial failure, to meteorites hitting the earth. Tesh raised pulse levels still further by sharing with us the news that the Civil Contingencies Secretariat had a 'reserve list' of around 40 risks that did not (as yet) feature on the probability barometer.

All these 'unknown unknowns' were very interesting, said Travers, but where did it leave things at the central government policy level? Community resilience was still key to tackling all levels of risk, said Tesh. 'We used to have the fond idea that government would take all the responsibility for Joe Public when it came to tackling emergencies. In practice, if you don't have an efficient way for local services and communities to plug in, you're stuffed.' Hall agreed that community resilience was crucial, but stressed that some demographic groups were much more vulnerable than others, such as those in repeatedly flooded areas and old people in extremely cold winters.

Preparedness, reiterated Dhonau, was always the order of the day. 'In my own house, we have mock fire alarms and a “family flood plan”. Personally, I hate risk aversion, but it's crucial to know where the hamster's going to go, and how to get granny to the car on her Zimmer frame.'

John Oxford said that he was all for community resilience, but with one caveat: he worried about a 'dad's army' of volunteers wandering about in an uncoordinated way. And Bettison still thought insurers could do more to help local authorities tackle risk, for example, by investment in preventing flood damage and offering longer-term insurance contracts.

All of which brought us back to the starting point: how to negotiate a way through dirigiste command-and-control risk responses – and a more democratised approach that fully engages the public in looking after its own interests? Or, as the propaganda from an earlier era would have put it, how to protect and survive.

PFoct2008

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