Uncertainty, risk and decision making in local government

‘Localism works’, LG Group Annual Conference, ICC Birmingham

Simon Pollard, Sophie Rocksand Mark Smith

s.pollard@cranfield.ac.ukwww.cranfield.ac.uk/sas/risk

Risk - some observations

• We are all risk managers; personally, professionally• Historic focus on analysis and process, less so on systemic

understanding and human factors• ‘Risk assessment’ has a mixed reputation in the public mind

– bureaucracy, tick box, nanny state?• Resource constraint - ‘measured risk-taking’ (not

recklessness) if services are to change• Fragmentation of oversight is a possibility• Technical silos and the language of risk• Risk governance – people, organisations, evidence,

accountability, responsibility, risk culture

What drives risk?(an analytic perspective)

Potent hazards (sources) become available (pathways) to things we value (receptors), posing them harm (loss of value)

Different characteristics for risks

• Extreme risks (safeguarding vulnerable adults and children);

• Moderate risks (crime and community safety, including fire);

• Natural hazards (preparation for severe weather events, for health pandemics);

• External threats (terrorist activity);• Treasury management and investments; and • Risk of failure in major service redesign.

(after Lyons, 2007)

Risk domains in local authority settings

Individuals care of elderly

Authority initiated

reorganisation

Unable to controlhealth

pandemics

Groups of individuals

environmental pollution

Risks to communities

Risks from events

Risks from decision making

processes

Risks to vulnerable

adults

LARCI funded research –motivations

• Partnership working with democratic accountability

• Desire for ‘fit for purpose’ risk appraisal• Expectation of taking more risk, but in a

measured way• Expectation of increased accountability and

empowerment by actors• ‘Nuanced approach’ to what works• Practitioner focus – best judgement at all times

and seek to improve your judgement

“A repertoire of ideas of

practical value and use, to

inform risk strategies”

Methodology

Seven themes that emerge from 12 interviews

Emergent theme (no. sources, no. references to) • Learning (9, 82)• Responsibility (9, 78)• Process (9, 55)• Uncertainty (9, 54)

• Communication and consultation (9, 25)• The strategy-operational gap (8, 24)• Weight of evidence (8, 18)

N Maturity Mode / Style Process characteristic and effect

5 Optimised Adaptive Double loop learning

The organisation is ‘best practice’, capable of learning and adapting itself. It not only uses experience to correct any problems, but also to change the nature of the way it operates.

4 Managed Quantified Single Loop learning

The organisation can control what it does in the way of processes. It lays down requirements and ensures that these are met through feedback.

3 Defined Measured Open loop

The organisation can say what it does and how it goes about it but not necessarily act on its analyses

2 Repeatable Prescriptive The organisation can repeat what it has done before, but not necessarily define what it does.

1 Ad hoc Re-active Characterises a learner organisation with complete processes which are not standardised and are largely uncontrolled

0 Incomplete violation Incomplete processes, criminal, deliberate violations

Interpretation of maturity level

Risk and organisational learning – the change agenda

orga

nis a

tiona

l val

ue

Organisational learning- ‘maturity’ within public sector organisations

(Marsh, 2009)

present in silos

processdriven

towardsstrategic

value-added

Good risk governance creates value – a power utility’s risk journeyin practice

Process sophistication

Org

anis

atio

nal v

alue

Risk specialization

Enterpriserisk awareness

Risk management integration

Risk/mitigation optimization

6 months 12 months 18-24 months 24-48 months

Senior Managementand Boardinformation needsevaluated;

Preliminary risk profiledeveloped;

Policies established or refined;

Standard terminology,techniques, documents established;

Functional unitaccountabilities clarified

Risk Profile refined(focus is on residual risks and tolerances);

Regular reporting toSenior Managementand Board of Directors established;

Corporate risk assessmentembedded in businessplanning process;

Local risk ownersidentified; local riskmanagement expertiseidentified; skills andknowledge transferoccurring

Corporate performancemeasures refined torecognize risk tolerancesand priorities;

Risk assessment andprioritization fully embeddedin business planning;

Risk profile interdependenciesrecognized;

Local risk managementprocesses fully active

Clear ties between stakeholder value andrisk management activities;

Comprehensive riskportfolio created; newrisk exposures identified early; appropriate priority and mitigation determined quickly;

Risk management embeddedall key business processes,including strategic planning;

Local risk managementprocesses fully aligned withCorporate objectives

(after Fraser, 2005)

Responsibility (to act) and accountability(to supply resources)

• Risk appetite – has it been discussed?• Zero risk is not an option• Difficult to empower others if not• Keeping risk live and risk registers active• Power and personality – better, facilitative regulation

(Davies, 2010)

The ‘Just culture’ movement – balancing accountability, organisational learning and acceptable behaviour

Aviation and patient safety reporting; see Sidney Dekker and James Reason on balancing safety and behaviour.

Signals – pay attention to them, investigate them, don’t normalise them

Genesis of industrial accidents; seeAndrew Hopkins on mindful leadership

Situational awareness, cognition, task performance and team behaviours

Cognition and human factors in the workplace; see Rhona Flin on situational awareness

Process – latent flaws in real systems

(after, Reason 2000)

Process – how accidents happen

Human error: types• slips• lapses• mistakes• violations

Human error: causes• skill• rule• knowledge

Assessment tools for safety management

systems

Socio-technical systems failures

Management and organisational factors: management control

Management theory

Ergonomics

Safety cultures issues. Attitudes

to safety

Failures of safety

management systems

Assessment tools for safety cultures and attitudes to

safety

People failures:Hierarchical

Task Analysis.Human reliability

Assessments

The underlying basis of human actions/beliefs

•psychological•sociological•cultural•political•economic

People problems

System problems

(after Hurst, 1998)

Technical problemsTechnical hardware

Failures:Reliability

EngineeringDesign

Accident

Assessment tools for

hardware and the impact of

failure

Uncertainty in decisions

“we have formal evidence based processes which are based on big issues, but still need local knowledge to understand and

interpret it”

(adapted from Snowden and Boone, 2007)

• what sort of uncertainty is it?• is it resolvable?• care on paralysis by analysis• are we safe now?• are we doing enough to keep us safe?

(Miles, 2002)

Better risk governance - conclusions