Governments must anticipate and manage big risks, from pandemics to financial shocks. The traditional approach of risk management, which includes risk identification, assessment, and mitigation, is insufficient. Instead, a new model is proposed that combines the best elements of the military, finance, and resilience thinking. This model suggests that governments should:
1. Acknowledge uncertainty: Accept that not all risks are predictable and that the future is inherently uncertain. This means moving away from a false sense of certainty and towards a more open, adaptive approach.
2. Invest in resilience: This involves creating systems that can withstand shocks, recover quickly, and adapt to new circumstances. It means investing in infrastructure, skills, and social capital, as well as ensuring that there is enough spare capacity in the system to cope with shocks.
3. Use scenarios and simulations: These can help to test systems, identify weaknesses, and prepare for a range of possible futures. They can also encourage creative thinking and help to break down silos within government.
4. Create a culture of learning: This includes learning from past mistakes, from other countries, and from different sectors. It also involves creating a culture that values evidence, data, and scientific advice.
5. Build alliances: Governments cannot manage risks alone. They need to work with businesses, civil society, and international partners to share information, resources, and best practices.
This new model requires a shift in mindset, but it offers a more effective way of managing big risks. It recognises that uncertainty is a fact of life and that resilience is a key asset. It also recognises the importance of learning, collaboration, and adaptability in a complex, rapidly changing world.
Go to source article: https://www.geoffmulgan.com/post/how-should-government-manage-big-risks-pandemics-to-financial-shocks