2.2.6 Development of risk-management frameworks

Risk management is defined as the culture, processes and structures directed towards realising potential opportunities whilst managing adverse effects (AS/NZS, 2004). Risk is generally measured as a combination of the probability of an event and its consequences (ISO/IEC, 2002; see also Figure 2.1), with several ways of combining these two factors being possible. There may be more than one event, consequences can range from positive to negative, and risk can be measured qualitatively or quantitatively.

To date, most CCIAV studies have assessed climate change without specific regard to how mitigation policy will influence those impacts. However, the certainty that some climate change will occur (and is already occurring – see Chapter 1) is driving adaptation assessment beyond the limits of what scenario-driven methods can provide. The issues to be addressed include assessing current adaptations to climate variability and extremes before assessing adaptive responses to future climate, assessing the limits of adaptation, linking adaptation to sustainable development, engaging stakeholders, and decision-making under uncertainty. Risk management has been identified as a framework that can deal with all of these issues in a manner that incorporates existing methodologies and that can also accommodate other sources of risk (Jones, 2001; Willows and Connell, 2003; UNDP, 2005) in a process known as mainstreaming.

The two major forms of climate risk management are the mitigation of climate change through the abatement of GHG emissions and GHG sequestration, and adaptation to the consequences of a changing climate (Figure 2.1). Mitigation reduces the rate and magnitude of changing climate hazards; adaptation reduces the consequences of those hazards (Jones, 2004). Mitigation also reduces the upper bounds of the range of potential climate change, while adaptation copes with the lower bounds (Yohe and Toth, 2000). Hence they are complementary processes, but the benefits will accumulate over different time-scales and, in many cases, they can be assessed and implemented separately (Klein et al., 2005). These complementarities and differences are discussed in Section 18.4 of this volume, while integrated assessment methods utilising a risk-management approach are summarised by Nakićenović et al. (2007).

Figure 2.1. Synthesis of risk-management approaches to global warming. The left side shows the projected range of global warming from the TAR (bold lines) with zones of maximum benefit for adaptation and mitigation depicted schematically. The right side shows likelihood based on threshold exceedance as a function of global warming and the consequences of global warming reaching that particular level based on results from the TAR. Risk is a function of probability and consequence. The primary time horizons of approaches to CCIAV assessment are also shown (modified from Jones, 2004).

Some of the standard elements within the risk-management process that can be adapted to assess CCIAV are as follows.

• A scoping exercise, where the context of the assessment is established. This identifies the overall approach to be used.
• Risk identification, where what is at risk, who is at risk, the main climate and non-climate stresses contributing to the risk, and levels of acceptable risk are identified. This step also identifies the scenarios required for further assessment.
• Risk analysis, where the consequences and their likelihood are analysed. This is the most developed area, with a range of methods used in mainstream risk assessment and CCIAV assessment being available.
• Risk evaluation, where adaptation and/or mitigation measures are prioritised.
• Risk treatment, where selected adaptation and/or mitigation measures are applied, with follow-up monitoring and review.

Two overarching activities are communication and consultation with stakeholders, and monitoring and review. These activities co-ordinate the management of uncertainty and ensure that clarity and transparency surround the assumptions and concepts being used. Other essential components of risk management include investment in obtaining improved information and building capacity for decision-making (adaptive governance: see Dietz et al., 2003).

Rather than being research-driven, risk management is oriented towards decision-making; e.g., on policy, planning, and management options. Several frameworks have been developed for managing risk, which use a variety of approaches as outlined in Table 2.1. The UNDP Adaptation Policy Framework (UNDP, 2005) describes risk-assessment methods that follow both the standard impact and human development approaches focusing on vulnerability and adaptation (also see Füssel and Klein, 2006). National frameworks constructed to deliver national adaptation strategies include those of the UK (Willows and Connell, 2003) and Australia (Australian Greenhouse Office, 2006). The World Bank is pursuing methods for hazard and risk management that focus on financing adaptation to climate change (van Aalst, 2006) and mainstreaming climate change into natural-hazard risk management (Burton and van Aalst, 2004; Mathur et al., 2004; Bettencourt et al., 2006).

Therefore, risk management is an approach that is being pursued for the management of climate change risks at a range of scales; from the global (mitigation to achieve ‘safe’ levels of GHG emissions and concentrations, thus avoiding dangerous anthropogenic interference), to the local (adaptation at the scale of impact), to mainstreaming risk with a multitude of other activities.