How should government manage big risks – pandemics to financial shocks?

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8th April 2020

Geoff Mulgin

University College London


The COVID-19 crisis has been an extreme stress test for governments around the world, with widely varying performance so far. I’ve already described some of the early lessons and the possible implications for government in the future.
Here (in this extended version of a blog on the States of Change site) I address a broader question that will again come into view once the intensity of the crisis passes and we move into what could be a protracted period of partial returns to normality: the question of how governments should in general handle risks, crises and disasters like COVID-19.

This issue is coming into sharper focus as investigations start looking into the missteps of the last few weeks. It's also a question I found myself heavily involved in twenty years ago. In the year 2000 a strike by fuel drivers almost brought the UK to a standstill. It turned out that in the age of just-in-time production stocks of fuel would barely last a couple of days. Food deliveries and hospitals would grind to a halt. Luckily the strike was quickly settled. Then, less than a year later, the UK faced a severe outbreak of foot and mouth disease which brought the countryside to a standstill. In the end, some 6 million cows and sheep were slaughtered to stop the disease.

Both crises showed up the weaknesses of government’s systems for handling risk. I was then running the UK government Strategy Unit and we were given the task of looking in a fresh way at how risks of all kinds were handled.

We examined how big companies and other governments handled things; tried to make sense of what had and hadn't worked in the past; and made recommendations. None of the conclusions were earth-shattering - but they did lead to significant change. Inevitably, organisations that are focused on the present tend to ignore potentially harmful risks, particularly low probability but high impact ones. So it was vital to counter that tendency by paying more attention to risks, which meant institutionalising processes for better understanding and preparing. We then helped put in place pretty comprehensive machineries within departments and the centre of government for doing just that:

· Scanning for potentially high impact if low probability events – from pandemics to financial crises, attacks on critical infrastructure to extreme weather events.

· Preparing decision-makers – through simulations, scenarios and models.

· Creating a central Civil Contingencies Unit, networked into local government, that could be quickly mobilised in a crisis.

· Ensuring budget allocations to deal with some of the obvious growing threats, such as increased flooding.

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