OECD Recommendation on the Governance of Critical Risks

OECD Governance of Critical RisksBy Organisation for Economic Co-operation and Development (OECD)

This Recommendation is recognition of the escalating damages that occur due to extreme events. Total damage caused by natural and human-induced disasters in OECD and BRIC countries has been estimated at nearly USD 1.5 trillion over the last decade. New vulnerabilities and interconnections seem to amplify the economic impacts. Recent events are a stark warning for economic systems that are dependent on global supply chains.

The Recommendation proposes a fundamental shift in risk governance towards a whole of society effort. It proposes actions that governments can take at all levels of government, in collaboration with the private sector and with each other, to better assess, prevent, respond to and recover from the effects of extreme events, as well as take measures to build resilience to rebound from unanticipated events.

Making society more resilient to critical risks by:

  • Identification and assessment of risks takes interlinkages and knock on effects into account. This helps set priorities and inform allocation of resources.
  • More investment in risk prevention and mitigation such as investments in protective infrastructure, but also non-structural policies such as land use planning.
  • Flexible capacities for preparedness, response and recovery help manage unanticipated and novel types of crises
  • Good risk governance -transparent and accountable risk management systems that learn continuously and systematically from experience and research.

What can governments and policy makers do to promote inclusiveness in risk governance?

  • Frame national policies for all-hazards risk management: Governments need to provide leadership with clearly articulated goals, and match their words with actions that supports identified priorities.
  • Engage the private sector in partnerships: The means to manage critical risks are not always in the hands of government. Partnerships that secure supply chains, reinforce business continuity, and foster the delivery of resources during emergencies are key.
  • Raise awareness of risks to increase stakeholder engagement in policy processes: The efficiency and effectiveness of risk governance is grounded in putting exposed populations on notice and providing them with the information they need to take protective measures.

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