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Barry Quirk web: www.barryquirk.com twitter: @BarryQuirk1 public management in conditions of uncertainty and risk

BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

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Page 1: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

Barry����������� ������������������  Quirk

web: www.barryquirk.com!twitter: @BarryQuirk1

public management in conditions of uncertainty and risk

Page 2: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

•a thorough grasp of uncertainty and risk is central to effective public management

•local government professionals & politicians need to increase their “risk literacy”

•we need to help citizens be more “risk savvy”

just three things

Page 3: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

politics and the art of

government

the science of public policy

the craft of public

management

we are here

Page 4: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

“conduct that

encourages others to act responsibly in the

public interest, so that they

achieve more together than they would have achieved separately and/or on their own.”

public leadership

Page 5: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

elected representatives & public service

professionals selflessly serving

in the public interest

politicians & bureaucrats

capturing the state and taxpayer’s

resources for their own private (career

based) interests

cynicism idealism

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Adam Smith, The Wealth of Nations

realism

Page 6: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

getting a grip on uncertainty and risk

Page 7: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

riskhazard

jeopardy

threatopportunity

chance

harm

uncertainty

danger

peril

instability

precariousnessunpredictability

insecurity

fearFATE

fortune

accident

Page 8: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

“You cannot stop the birds of worry flying over head,

but you can prevent them building nests in your hair”

����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������   ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  ����������� ������������������  Chinese����������� ������������������  Proverb

distant����������� ������������������  v����������� ������������������  close����������� ������������������  risks

Page 9: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

Hobbes����������� ������������������  &����������� ������������������  the����������� ������������������  State����������� ������������������  security����������� ������������������  from����������� ������������������  the����������� ������������������  risk����������� ������������������  from����������� ������������������  others

Leviathan (1651) Thomas Hobbes

“Man seeks nothing but his own selfish pleasure, this naturally leads to a war in which every

man's hand is against his neighbour.

In pure self-interest and for self-preservation men enter into a

compact by which they surrender their natural freedom to an absolute ruler - the State.”

Page 10: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

certainty

risk

uncertainty

uncertainty����������� ������������������  =����������� ������������������  risk/

General uncertainty: “it’s uncertain whether the Monarchy will exist in 2050”

Specific uncertainty: “it’s uncertain whether Kate will have a third child”

Risk: “There is a risk the next child will look uncannily like Prince Charles”

Certainty: “You can be certain that the next child won’t be called Barry!”

Page 11: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

uncertainty����������� ������������������  is����������� ������������������  more����������� ������������������  than����������� ������������������  a����������� ������������������  game����������� ������������������  of����������� ������������������  chance

“the unstructured, irregular randomness found in life is not like the structured regular randomness found in games”

Taleb N (2013) Anti-Fragile

Page 12: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

probabilities����������� ������������������  vary����������� ������������������  as����������� ������������������  does����������� ������������������  the����������� ������������������  utility����������� ������������������  of����������� ������������������  “predictors”����������� ������������������  

regularity and normal distributions

fractals and irregularity

Page 13: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

risk����������� ������������������  and����������� ������������������  rhyme����������� ������������������  in����������� ������������������  politics•politics involves “sculpting the future”

•the rhythm of politics lives off uncertainty and risk

•“rhetorical redescription”: what’s reckless is re-described as boldness; … from risks to opportunities

Page 14: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

fate����������� ������������������  and����������� ������������������  will

Fortuna

Virtù

“the unribboning, unceasing flow of unpredictable events”

“the exercise of resolution, imagination, determination and courage”

“fate”

“willpower”

Machiavelli “how can decision makers master their fate?”

written 1513, published 1532

Page 15: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

positional����������� ������������������  anxiety:����������� ������������������  ����������� ������������������  you����������� ������������������  have����������� ������������������  the����������� ������������������  role,����������� ������������������  you����������� ������������������  get����������� ������������������  the����������� ������������������  worry

Page 16: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

child deathsservice failurecommunity tension

loss of budgetary controleconomic shocks

health pandemics

crime & fear of crime

murders

data security

terrorismpublic����������� ������������������  risks����������� ������������������  in����������� ������������������  London

municipal bankruptcyeconomic overheating

rising social inequality

illegal migrants

costs of housing & homelessness

Page 17: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

my����������� ������������������  organisation’s����������� ������������������  current����������� ������������������  riskscan we keep ahead of the cuts curve?

•will we make decisions in time (political acceptability)

•can we implement swiftly enough (managerial deliverability)

can we secure desirable social results locally?

•investing in public infrastructure for growing population

•afford the cost of change (cf the ongoing benefit of change)

can we sustain our relevance for the 21st century?

1

2

3

Page 18: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

overall spending of £1.2bn

Schools funding £273m

Housing benefit £246m

Council housing £169mCapital spending £126m

supported by income £120m

Net budget £268m1/3

Children’s social care

!!

£105mAdult

social care

!£47m

£116mall other services

Lewisham Council 2014

Page 19: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

what����������� ������������������  risks����������� ������������������  do����������� ������������������  I����������� ������������������  worry����������� ������������������  about?agency failures: strategic litigation operational financial technology

regulatory risks: service inspections data quality & security health & safety compliance other risks:

workforce fraud & corruption infrastructure (incl digital)

environmental

1

2

3

Page 20: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

organisational����������� ������������������  risks����������� ������������������  ...

risk of failure in operating model (where the organisation’s revenue model is not aligned to its business model)

where supply markets are fragile, where competition is not healthy enough, or commercial models are “overcooked”

risk of agency stretch or “over reach”

Page 21: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

!

management attention proportionate to risk ..

managerial controls to .

mitigate “risk realisation”

the theory …

.

.The Orange Book identifying risks; assessing risks; choosing risk appetite; addressing risks !Four “T”s tolerate, treat, transfer, terminate HMT 2004

high vulnerability

low vulnerability

low threat

high threat

risk����������� ������������������  registers

elaborate����������� ������������������  “blame����������� ������������������  avoidance”����������� ������������������  strategies

Page 22: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

managerial����������� ������������������  reductionism

the world “in here” that we think we

can control

how best to balance our focus on the “risks to us”

and “the risks to

them”?

the world “out there”

that we think we can not

really control

Page 23: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

managerial errors: type 1 and type 2

failure of foresight: doing some positive action that subsequently proves to be wrong

the bias of hindsight: not doing a positive action that would have definitely been right

1

2

loss & failure v gain & success

Page 24: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

James Reason (1990) Human Error

the����������� ������������������  Swiss����������� ������������������  cheese����������� ������������������  model����������� ������������������  of����������� ������������������  risk

some holes due to active failures

other holes due to latent conditions

accident

hazards

Page 25: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

17 x 24

408

risk:����������� ������������������  emotion����������� ������������������  or����������� ������������������  calculation?

Page 26: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

1,000

10

9 1

990

99 891

9 plus 99 = 108

false negative

false positive

so, for every 12 people who are told they have the condition, only 1 actually has it!

and one person has it, who has been told they don’t!

to����������� ������������������  communicate����������� ������������������  risk,����������� ������������������  avoid����������� ������������������  percentages

correct correctincorrect incorrect

Page 27: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

•chance of you being a victim of crime

•chance of being caught if you commit a crime

•chance of your home being flooded

•chance of you flooding your home

•chance of your occupation being replaced by an App

•chance of it raining tomorrow afternoon (20%!)

Page 28: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

RBS had 4,000 risk managers the month before they received a £46bn bailout and

were effectively nationalised

“the difficulty was seeing the risk to the system as a whole rather than to any

specific financial instrument or loan. Risk calculations were most often confined to slices of financial activity, using some of the best mathematical minds in our

country and abroad. But they frequently lost sight of the bigger picture.”

a����������� ������������������  lesson����������� ������������������  from����������� ������������������  the����������� ������������������  2008����������� ������������������  Crash

Page 29: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

simplechaos

complex complicated

none

A Y

DC

B

A plus B causes Y

A

Y

DC

B

A

BY

C

D

Z

causation

Page 30: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

simplechaos

complex complicated

problems & answers are well known there’s one or a few right answers

“best practice” (SOPs)

problems are open-ended range of possible answers

analytical, investigative, but bounded “expert practice”

problems & solutions are evolving there are no right answers

lightly bounded action “experimental practice”

unclear what data is problem or solution there are no answers

creative action & crisis management “novel practice”,

disorder

Page 31: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

rapid learning

open collaboration

resilience agility

navigational leadership

strategic anticipation

managing����������� ������������������  for����������� ������������������  uncertainty

six capabilities for “strategic readiness”

Syrett M & Devine M (2012)

Managing Uncertainty, The Economist

Page 32: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

T C R IS

= +

Where����������� ������������������  T����������� ������������������  =����������� ������������������  trustworthiness����������� ������������������  C����������� ������������������  =����������� ������������������  credibility����������� ������������������  R����������� ������������������  =����������� ������������������  reliability����������� ������������������  I����������� ������������������  =����������� ������������������  intimacy����������� ������������������  S����������� ������������������  =����������� ������������������  self-orientation

( ) x

trustworthinesswhy should your “risk communication” be trusted?

Page 33: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

electorate

professional staff

suppliers

politicians

senior managers

a fragile chain of trust

Page 34: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

•embed “risk literacy” in your management practice

• adopt clear risk communication strategies

•empower your staff to take measured risks in search of improved public outcomes

•help everyone to be more “risk savvy”

Page 35: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

“lower risks, offer lower opportunities

for progress or growth”

“there are no risk free decisions; doing nothing is a risk …

!

so don’t prevaricate!”

Page 36: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

The most

are often the ones that are hidden in plain sight

obvious andimportant risksand which are hardest to see

and talk about ...

Page 37: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

thank you

Page 38: BQ at SOLGM 2014 - Amazon S3 · ChineseProverb distantvcloserisks. Hobbes&theState securityfromtheriskfromothers Leviathan (1651)! Thomas Hobbes “Man seeks nothing but his own

References • Beck U (1992) Risk Society: toward a new modernity, London, Sage

• Bobbit P (2013) The Garments of Court & Palace: Machiavelli and the world that he made, Grove Press, New York

• Bovaird T & Quirk B (2013) “Reducing Public Risk and Improving Public Resilience: What’s to Be Done?”, Inlogov

• Gigerenzer G (2002) Reckoning with Risk: learning to live with uncertainty, Penguin

• Gigerenzer G (2014) Risk Savvy, London, Allen Lane

• HM Treasury (2011) The Green Book: appraisal & evaluation in central government, London

• HM Treasury (2004) The Orange Book: management of risk , principles and concepts

• Kahneman D (2011) Thinking Fast and Slow, London Allen Lane

• Machiavelli N (1532) The Prince,

• NAO (2004) Managing risks to improve public services

• NAO (2011) Managing risks in government; (2004) Managing risks to improve public services

• Snowden D & Boone M (2007) A Leader’s Framework for Decision Making, Harvard Business Review; & Snowden D (2013) Cognitive Edge

• Syrett M & Devine M (2012) Managing Uncertainty, The Economist

• Taleb N (2004) Fooled by Randomness: the hidden role of chance in life and in the markets, Thomson, London

• Taleb N (2013) Anti-Fragile, Thomson, London