25+ Years Risk Management

Book presentation

Why 75 essays spanning more than 25 years have been brought together in the e-book ‘Publiek Risico: Essays’: to inform and to inspire

Eric Frank en Jack Kruf | August 2020


The principles of risk management are inherent in every ecosystem and, as far as humans are concerned, are some 300,000 years old. Every human still has stored in his brain the early stages of development. To survive as a group or as individuals. It occurred to us that these basic principles are palpable in the thoughts expressed in this selection of essays. Much of it is essential.

Now, anno 2020, we look back. For 15 years (period 2006-2020) we have been alternately responsible for the establishment, control and management of the Dutch branch of PRIMO, the Public Risk Management Organisation. A good time to present a selection of essays that gives a picture of the origin, the functioning and the development of the risk management profession. This is the introduction to the e-book Publiek Risico: Essays (in Dutch).

It is a personal selection, in which, in our view, the various angles of the field are most strongly displayed. It is a selection, which we know is selling people short, of course. But the choice of a limited set of essays and pages forces one to choose. It is 75 essays and 723 pages. Bundled in this e-book. 

Risk management as a profession is as old as the road to Rome

Risk management as a profession is as old as the road to Rome (and actually much older as already indicated above), but the starting point for the Netherlands is laid in 1995, in the run-up to the process whereby the central government in the Netherlands planted the first seeds. Not really for itself, no, not really, but to devise a construct in which it could decentralize tasks to lower governments and then to enforce supervision of their execution. So divest and see that it goes well. A special reason, then, which is not so much the public good but rather the mechanism of control. That is the first thing that strikes one.

The selection of articles shows the interpretation of this approach, also shows that many experts and scientists have contributed many new ideas to it, but the central government has not really changed its mind in terms of position and approach in those 25 years. There is actually the paragraph on resilience as the only real framework. Although this is legally complied with, many municipalities hardly apply it as a real steering instrument.

What is also striking is that the municipalities, provinces and water boards are actually not at all organized in this regard, even after 25 years. Everyone works with their own approach, with their own frameworks, models, consultants and even their own scientists. There is hardly a corporate framework with which municipalities, provinces and water boards work.

Only 25 years after the government made the decision to work this way, the umbrella organizations are showing, albeit sparsely – incidentally, on a project basis and usually facility by facility – a sign of life on this issue. This is noticeable in the selection. Essays from these are lacking. The essays come mainly from a few front runners in the public domain, scholars or external consultants.

A search of the public administration itself has very moderate results

Risk management has not landed, it is for many directors and top managers a fremdkörper. It has not become a management tool for sailing sharply to the wind, innovating and looking ahead. It is a must, and sometimes even a washing-up job.

Risk management is still a push model, actually an unwanted child of the government, in which consultants and commercial parties have of course provided a breath of fresh air, but also in which they came up with special ideas, approaches and models. And above all, the diversity of definitions and explanations is enormous. It seems to have become a polluted term, a container. This causes great confusion and hap-snap business. This is where the shoe pinches with regard to public risk management. The playing field is divided and there is no unified language.

Our selection of articles is a call to really take up the gauntlet and re-evaluate the wealth of knowledge and ideas before us, to use them and above all to get to work. The ball is in the court of the board and top management. This requires authority and, above all, support and consistency from the top of the ministries.

After 25 years, we are still kind of where we were 25 years ago: most directors and top managers don’t feel like adopting this profession profession professionally at all. Their explanation is that it is negative, inhibiting, not motivating, avoiding. Of course, this is nonsense, but perception is sometimes stronger than reality. The core of the profession is knowingly not understood. There is work to be done, a lot, indeed a lot. This selection contains the ingredients.

In front of you is a journey of more than 25 years, which also shows that good ideas have been launched and many attempts have been made to broaden the profession and make it mature. Some of these, in our view, are worth sharing and deserve to be put on the drawing board for the continued development of the profession. We wish you a reading with pleasure and inspiration. Ω

Lees in Nederlands

Colofon

Editorial: Eric Frank (language editor, Dutch) en Jack Kruf (final editor). With thanks to all authors for their contribution.

ISBN/EAN: This book has been registered in 2013 and published in 2020 at Centraal Boekhuis as Publiek Risico: Essays, with ISBN-number 9789491818011.

Publicatie: This e-boek is exclusively and on personal insights of the editors composed and curated. It is published by Governance Connect. On the 1st of January 2022 the rights have beeb taken over by Civitas Naturalis Foundation. The publication has been disseminated in the network of public managers in The Netherlands and Flanders and is used by PRIMO Nederland and PRIMO Europe for support in their education programs.

Rechten: All rights reserved. No part of this publication may be reproduced, stored in a retrieval system of transmitted, in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of the publishers. This publication may not be lent, resold, hired out of otherwise disposed of by way of trade in any form, binding or cover other than that in which it is published, without the prior consent of the publishers. No rights can derived from the contents of this book.

Posted on Categories Book

About ‘Public Risk’

By Jack Kruf

During the founding of the idea of PRIMO in Strasbourg on the 1st of April 2005, the need for design principles related to the governance of public risk was extensively discussed. We, to be precise the Executive Committee of UDITE, being the European Association of Local Chief Executives, defined it as a form or way of working towards the prevention and reduction of possible hazards and risks (i.e. a measure of hazard) in our (European) cities, and with this to the sole purpose to build public trust on values like safety, quality of life, protection and coherence in society.

A myriad to deal with

Based on experiences in this network we conclude that most of the public leaders and managers we meet – and if we ask them in our Public Risk Forum, round tables and think tanks -, define risk all in their own way. There is a myriad of definitions and perceptions out there. I guess there are 100 different definitions of risk around, all based on unique principles, perspectives, angles, and driven towards further segmentation by a myriad of advisors, trainers, scientists (o, yes), and software developers. All created in and by their own approaches, leading to a highly segmented and fragmented landscape of risk and risk management.

Moreover, this landscape is widened through the attempts of rebranding this craftsmanship towards success management, value management, business continuity management, risk leadership management, performance management, quality management. A common language seems to be needed. How to proceed and promote a common language and understanding from here? It starts with choosing a proper and understandable definition, built on scientific grounds, proven as workable throughout the years and accepted by the international community.

A wobbly landscape

To be frank, it is not only the difference in definition that causes the wobbly landscape of risk,  but we know that with every definition comes a unique framework, methodology, method, technique, and set of tools. In fact, an unwanted and undesired situation from the perspective of knowledge sharing, efficient and effective working. Certainly in our profession of public risk management, i.e. the management of the public domain (and values within) of citizen, society, and the natural environment – PRIMO has chosen to stay very close to the Sustainable Development Goals (SDG’s), the national and international Constitutions and the governmental plans and programs, based on democratically held elections.

This to come to effective decision making, governance, and management, it would be conditional – in fact it is a constraint of the first order – that there should be an understandable and shareable definition and approach.

Communication and promotion as mission

PRIMO has decided to stick to basics. More than often we are asked which definition of risk we recommend and why. And more and more, we are asked if we please could encourage and contribute to a more consistent way of use and understanding of risk and risk management. Therefore we underline this definition. We will communicate it more actively in the coming years and will promote it by involving stakeholders through our portfolio of advice, research, and education. In that, we try to connect it to and port it with other definitions, to possibly build a kind of translation mechanism.

Renn and Klinke (2002)

We think that most of the used definitions of risk combine causes, drivers, triggers, stimuli and consequences or effects with the core part of risk itself. We think that it is wise to unlink these because it is our experience that most of the discussions in teams and groups end-up with “a lost in translation’ feeling and as far as we know not a common understanding. Most definitions are academically and institutionally based. Most public leaders cannot cope with that in the daily governance of public values. Besides that, most of the 100 definitions in town are hard to understand by the human mind, even definitions of renowned institutions or universities.

The definition which comes close to the essence of risk and risk management has been coined in 2002 by Ortwin Renn and Andreas Klinke. At the founding of PRIMO in 2005, we actually have chosen this definition, because it is based on historic principles and connected with its etymological origin (the Romans used the term riscare, meaning to run into danger). Renn and Klinke (2002) define:

Risk is the possibility that human actions or events lead to consequences that harm aspects that humans value. 

This definition is complete in its internal coherence between the core of risk, the human species in the center of the firmament [1] – we think that also not humans, being groups, organisations, clusters or agglomerations of organisations, as well as natural ecosystems with other species in charge -, the trigger, stimulus or cause [2], and the cascading process leading to… [3]).

Risk is the possibility [that human, 1] [actions or events, 2] [lead to consequences, 3] that harm (aspects) that [humans] value.

If we deduct and reduce this definition to the core of risk, based on Renn and Klinke (2002), this leads to the essence:

Risk is a possible harm to something of value.

In the approach of the PRIMO association, it is all about the public value, firstly that of citizen, society and natural environment and secondly that of all organisations – public or private – which play an active role in the development and delivery of or contribution to this value. 

Risk is directly linked with, in fact attached to value and can be considered as a deviation of or harm to value. We think that value is the optimum, based on formulation, calculation, or decision. It is what and where we want to be, what we prefer, love or like. We work from here. A risk is a suboptimum.

Bibliography

Renn, O. and Klinke; A.  ( 2002). A New Approach to Risk Evaluation and Management: Risk-Based, Precaution-Based and Discourse-Based Management. Risk Analysis, Vol. 22, No. 6 (December), 1071-1994.

*This article was originally published on the 17th of August 2020 by PRIMO Europe. It is amended on a few minor points.

Posted on Categories News

The Risk of Leadership

Leadership

A plea for a new search for ‘responsible-in-the-end’ leadership: stewardship

Jack Kruf | 10 March 2017


Of course, we have our democratic system as a great set of principles and values as a form of equipment for good public governance. Public leadership, concerning that of public organisations as well as of the public domain of society, is embedded in this system, at least it should be. You may expect excellent results, because the democratic system traces back to the Greek δημοκρατία 508 BC, and itself is tested and challenged over and over again. Through the millennia it developed until now.

Considering the present state of society and of natural ecosystems you may be surprised by the results of this period of 2525 years of development. The Global Risks Reports published by the World Economic Forum – published since 2005 – tell the story of how critical the earth condition is. Reading these reports I had a flashback to the year 1972 when the Club of Rome presented facts, findings and figures in the report The Limits to Growth. Since at least five decades (i.e. half a century!) we know what is going on and where many generations of leadership has brought us.

Not that good
Within this democratic system the results of our public leadership over the years are not that good. Autocratic systems perform not better. More than ever public risks – being deviations, harms and losses related to the public values we so highly pamper – seem to emerge at a faster pace – such as there are disruptions caused by climate change and cybercrime, large scale pollution and poverty, fundamental lack of social cohesion, water shortage and migration issues. Well, what can we say about risk leadership while leadership itself seems to be the risk? We elaborate on this.

Redefinition
Public leadership must be reconsidered against the background of the structural and diminishing trust of citizens in politics as a whole as well as in public organisations. In society you more and more sense and hear Houston we have a problem. The general feeling is that public leaders do not listen to citizens and companies, are perceived as the ‘elite’, do not act in line with their promises during election time. What makes things worse is the disappearance of public leaders after a governing period of 4 – 6 year, when their term has come to an end, and make place for a new wave politicians, all with new promises.

It seems that risk leadership itself has become a risk

There seems to be much governance from the board room and from behind the desk. The living world of society seems to be separated from the ruling system world, where the leaders actually live in. There is this hugely felt need under citizens, clients, companies and if they could talk to us by natural ecosystems as forests and coral reefs – for leaders that listen to the wants and needs and from there truly generate values as safety, balance, cohesion, continuity, predictability, protection and security. There are gaps and risks (as form of harms and losses to values), all over the place. 

From this perspective it is obvious that managing and governing the public risks, that emerge in society – well defined as risk leadership – needs to be redefined. It seems that leadership itself has become a risk factor. The so called risk leaders who cause risks in stead of leading us in the prevention, approach, mitigation and management. That is worrying, because the right course of public governance, anchored in the basic of democracy, depends on this. This aspect of weakness in leadership should at least lead to a continuing process of self-reflection, improved self-awareness and self-correction.

St. Thomas University: “The Risk Leadership Initiative is focused on several aspects of modern risk management, but one of our key issues of concern is the challenge of getting organisational leaders to integrate risk management thinking into their overall decision-making frameworks. Since PRIMO has, from the beginning in 2005, been focused on top level leaders we would be interested to hear your views on the problems, opportunities, and challenges of getting risk management included in executive, politician, and director level policy making and policy implementation. Examples of successes would be particularly interesting to us. Jack Kruf: “It is clear that leaders of public and private organisations should play a coordinating and connecting role in a more holistic approach of the risks we are facing. This well written and illustrated report impressively highlights where we find the challenges on our path toward a more balanced society. Sharing knowledge, open dialogue, building trust, good governance, stewardship and leadership.””

Political risk
In present think tanks has been brought forward by different stakeholders, the impressions that society itself is on a drift and that it seems that the democratic set of tools is running out of its ability to control. In the outcome and result of many elections and referenda it more and more becomes evident that the drift in risks, for society in public risks, finds ground in political leadership and hereto related components. Reflecting on risk leadership brings us automatically from the academic and management domain in the direction of politics.

According Niccolò Machiavelli politics is the world of mainly that of power and influence. Is then politics one of the key drivers of public risk itself? Is the quest of risk leadership in fact all about the risk of politics or political risk? It is possible. Zooming in a bit more here. What is political risk? Matthee (2011) defines it as follows:

‘Political risk is a type of risk faced by investors, corporations, and governments that political decisions, events, or conditions will significantly affect the profitability of a business actor or the expected value of a given economic action.’ 

In a broader definition also citizens and communities should find resort in this definition. Anyway, politics is an obvious dimension that brings harm. An important aspect to build in the new program of Professor Peter Young. It leads in my view to the conclusion that risk leadership at least needs to embrace itself and for its practical applicability and use has to be upgraded, maybe even reconsidered, redefined, re-invented or re-engineered. In the public domain of day to day business and government, it means that this attitude of self reflection needs be applied to every elected and governing council, the place where politics actually emerge.

It has become clear from the European UDITE and PRIMO network that many city managers express the general feeling – from extensive experience with society, citizens, clients, investors, businesses, NGO’s and media – that this unpredictable working of politics has become a critical factor and express that the system of democracy itself is under pressure.

The unpredictable working of politics has become a critical factor

What is leadership if “democracy is the worst form of government, except for all the others.” (Churchill). What is in perspective of the emerging public risks in fact the ability of democracy? Gore (2009) reflected as follows:

”It is now apparent that the climate crisis is posing an unprecedented threat… to our assumptions about the ability of democracy and capitalism to recognize this threat for what it is and respond…”.

These doubts in and lack of trust in de governing system, where leaders live, form the background for a further reflection on leadership, especially when it concerns risks for citizens, society and nature.

Stewardship
Discussing the major public risks within the European network of public leaders the main concept for leadership that addresses and mitigates is felt in the form of stewardship, not (only) in the religious way but as a form that has a true holistic approach. We remember here the great Alexander von Humboldt and his holistic approach over the borders of sciences in the early 19th century. He essentially connected sciences and approaches and with that crossed the lines of segmentation of opinions and views into a true ecological approach of areas and topics. Could his approach be a starting point for a more successful approach of public leadership, connecting vertically detail with headline, strategy with implementation and horizontally all relevant stakeholders. This way of perception could be beneficial and a great asset for modern leaders.

Alexander von Humboldt connected sciences… and with that crossed the lines of segmentation. 

Elaborate a little bit more on Von Humboldt. To be able seeing things as one and interconnected is the capacity of true ‘reflection’ needed, i.e. the capacity zooming out and seeing the larger picture, in connecting the dots. Like Alexander von Humboldt did in his 1858 masterwork (Cosmos part I). He for the first time in history connected the different sciences of the living and non-living world. He concluded: “Physical geography…, elevated to a higher point of view, … embraces the sphere of organic life…”. That was a great discovery and a major lesson to be able to connect the dots.

On governing cities and regions this reflection can be of great advantage in diagnosing the problem and define actions. Reflection is needed to get the bigger picture of things, people and happenings and to develop a sabbatical and clear view how to lead. It helps leaders getting the bigger picture, see more sharply the connection of elements within the public domain and thereby contribute to better decision making and putting things in perspective.

Change

From the network of PRIMO comes the experience that most of the public risks emerge from firstly lack of reflection capacity by leaders and with that insufficient diagnoses causes ineffective decisions. Only 12% of policies leads to implementation and from this only 25% is effective. Secondly lack of good working interfaces between stakeholders caused by a lack of binding leadership and thirdly by what can be defined as responsible-in-the-end leadership, i.e. stewardship. The last being an ethic that embodies the responsible planning and management of resources.

The concept of Risk Leadership can be possibly enriched with key leader capacities of reflection, connection and stewardship. In my view these can contribute to the reduction of risks, caused by leaders themselves and improve the quality of public and private governance and management in general. The initiative of Risk Leadership by the St. Thomas University could not have been timed better in this timeframe of changing paradigms, drifting societies and on a large scale emerging public risks. It is time for change. Ω


Bibliography

Gore, A. (2009) Our Choice: Changing the way we think. Emmaus, US: Rodale Books.

Matthee, H. (2011) ‘Political risk analysis’ in Badie, B., Berg-Schlosser, D., & Morlino, L. (eds.), International encyclopedia of political science (pp. 2011-2014). Thousand Oaks, CA: SAGE Publications Inc. doi:10.4135/9781412959636.n457

This article was originally published to contribute to the Risk Leadership Initiative of the Opus College of Business of the University of St. Thomas, lead by Professor Peter Young. As published here the article has been amended on its original in formulation and positioning. Hyperlinks and biography are added. The publishing date has been kept on its original: 10 March 2017.

 © Jack Kruf photo: Ludwig Oswald Wenckebach (1955) Monsieur Jacques [Bronze]. Rotterdam.