Resilient Infrastructure, Risk & Adaptation Strategies

In this episode of Risk! Engineers Talk Governance, due diligence engineers Richard Robinson and Gaye Francis discuss Resilient Infrastructure, Risk & Adaptation Strategies.

Following their attendance at the recent forum hosted by Engineers Australia's Risk Engineering Society and the Institute of Strategic Risk Management they unpack the big questions it raised about resilient infrastructure.

From Victorian bushfires to the Dreamworld tragedy, to Finland's invasion-proof subways, they explore what resilience really means in practice; who defines it, who's responsible for it, and why "future proofing" is often considered optional.

They discuss why resilience can't be managed in silos, how it means different things to different people, and how a due diligence and SFAIRP approach can shift resilience from a reactive response to a proactive strategy.

If you’d like us to cover a specific topic or have any feedback we’d love to hear from you. Email admin@r2a.com.au.

For further information on Richard and Gaye’s consulting work with R2A, head to https://www.r2a.com.au, where you’ll also find their booklets (store) and a sign-up for their quarterly newsletter to keep informed of their latest news and events. 

Gaye is also founder of Australian women’s safety workwear company Apto PPE https://www.aptoppe.com.au.

Transcript

Megan (Producer) (00:00):

Welcome to Risk! Engineers Talk Governance. In this episode, due diligence engineers, Richard Robinson and Gaye Francis discuss resilient infrastructure, risk and adaptation strategies.

(00:14):

We hope you enjoy the chat. If you do, please support our work by giving us a rating and subscribing on your favourite podcast platform. And if you'd like more information on R2A, our newsletter and resources or have any feedback or topic ideas, head to the website r2a.com.au.

Gaye Francis (00:32):

Hi, Richard. Welcome to another podcast.

Richard Robinson (00:35):

Morning, Gaye. Pleasure to be here.

Gaye Francis (00:38):

Good to hear. Today we're going to talk about a forum that we attended last week. I attended in person. You were online.

Richard Robinson (00:45):

Most recent, very recently.

Gaye Francis (00:46):

Very recently. That is true. And it was run by Engineers Australia's Risk Management or Risk Engineering Society and the Institute of Strategic Risk Management. And they were talking about resilient infrastructure, risk and adaptation strategies. And it was quite an interesting and robust discussion. There were some very interesting presentations and they were quite diverse.

Richard Robinson (01:15):

As you pointed out, I missed part of it because they couldn't actually get the online part working initially. So you were there for the whole thing and I was sort of sporadic.

Gaye Francis (01:24):

That's correct. So I guess one of the first things that for me that came out was the notion of resilience and what is resilience. And nobody really had a precise definition of what that meant. And they were taking it from different contexts and different ways. And I think one of the interesting ones was the presentation by Luke Belford, and it was about authorising resilience and value. And I think he came up with three key points: Success is silent. Failure is visible. Future proofing is seen as optional. And in the resilience space, it sort of showed up as avoided costs in the event of a disaster. I know the people in the resilience world don't like the word disaster, but it shows up when something happens. So for me, resilience is really about, it's a solution to a disruption or to a risk per se.

Richard Robinson (02:27):

Yes. I agree.

Gaye Francis (02:29):

So it was how risk management and resilience went hand in hand. And I think some of those things were really interesting.

Richard Robinson (02:36):

Well, we were talking about this before we started the podcast, and the ones that immediately came to mind to us with the Victorian bushfires and the desalination plant. Now the Victorian bushfires, because it's a fascinating thing because of the activities of the AER, the energy regulator, and the fact that a lot of bushfires are started by clashing conductors, but it's self-evident the bushfires start for all sorts of other reasons too, like lightning and so forth.

(02:58):

And that the bushfire, the really bad ones that burn lots of houses happen about once a generation in Victoria. And so the question then becomes, well, how much trouble are you going to go to to try and stop these things? And there comes a point where there's diminishing returns and it's better to be resilient. And so, okay, well, we want to keep building expensive houses, we'll all evacuate when the bad fires appear. And if it happens to burn our house down, it's cheaper to build back than it is to ... And you consider it as part of the cost of resilience.

Gaye Francis (03:23):

And I think that was one of the key things about the resilience discussion was what are we trying to protect against? What is the extent that we want to be resilient to? So what is this infrastructure? And it was an infrastructure context, of course. What does this infrastructure have to deliver and for how long and what situations does it have to be resilient to?

Richard Robinson (03:47):

But we took that a little bit further because one of the comments we have was in the Dreamworld incident where the four young people got killed, the cost of the payout to the people who got killed was about $3 million or so, but the cost to the underwriter for shareholder value was about a $30 million claim. And you're sort of going, wait a minute, that's the sort of order of magnitude.

Gaye Francis (04:07):

Seems disproportionate doesn't it.

Richard Robinson (04:08):

And the fact that the company was badly managed or didn't think these things through and wasn't applying the legislation consistently, these things like that, and the underwriter had to pay the shareholders for it. There's something not quite right about that. But of course, but if you define the whole purpose of company to make shareholder value, then it's entirely rational.

Gaye Francis (04:28):

And that was one of the other presentations was about that strategic risk management element and what boards had to consider in terms of being resilient. And we were talking along the lines of the board's there to sort of see the longer term strategy of an organisation typically, but then board directorships are often only a shorter term tenure.

Richard Robinson (04:52):

But that sometimes depends on the type of board. I mean, if you're talking about a water company, its business is providing a service to the community first and foremost ahead of any commercial consequence. Okay? It's meant to do it cost effectively, but failure to deliver water is number one.

Gaye Francis (05:06):

Yes. So the resilience comes in, is it the failure of water supply? And we've talked about this in a number of other podcasts, I think, and how long do you have to continue to deliver water or an essential service in the event that another essential service such as power goes out?

Richard Robinson (05:23):

And we did that cabinet in confidence work addressing that not so long ago in Victoria.

Gaye Francis (05:27):

So the key is you really do have to come top down and articulate what your critical success outcomes are or what is fit for purpose. What's the definition of this.

Richard Robinson (05:41):

What are you doing here? What are we trying to achieve? Now, the problem is politically that's a difficult thing to do because if you state that and then it all goes wrong, it's a bit of a problem.

Gaye Francis (05:50):

Well, and that went back to Luke's third point, wasn't it about future proofing is seen as optional.

Richard Robinson (05:56):

Well, if it hadn't gone wrong in your term of office, I mean, we've talked about this before, but if you're a politician, you actually quite like things going badly for the guys who are in office, because that means you're likely to get into power in the next election.

Gaye Francis (06:09):

That's a bit cynical, but true, true.

Richard Robinson (06:12):

That's like underwriters. I mean, underwriters are all in favour of losses as long as it's not to their company. It's fine when it's all the other insurance companies, because then premiums go up. It's a great success.

Gaye Francis (06:23):

You would hope though in a critical infrastructure environment, we're trying to have the whole community, the resilience of the community as a whole. But I think that comes down to one of our other issues that we've talked about in a number of other cases, and that's things are done in silos.

Richard Robinson (06:39):

Correct.

Gaye Francis (06:41):

And bringing it all together for that greater good of a community. And I think resilience is larger than an organisation.

Richard Robinson (06:49):

Well, that's meant to be what cabinet does for you, because they're the ones who meant to balance all these things. I mean, you want a well-educated community, you want to have a resilient community against bushfires, and there's obviously a balance there that has to be decided. Now, the problem you got is your political ... The politics has gone a bit strange in different parts of the world, and we're trying in Australia in some odd ways that I haven't quite figured out... But to have the high level resilience is ... I mean, why do you need a defense force to be resilient against external threats? And when you need it, you need it, so you better get it right. And it's getting very complicated out there.

Gaye Francis (07:30):

But I've never seen an overall infrastructure plan or resilient infrastructure plan for a community as a whole.

Richard Robinson (07:39):

Wait a minute, you go to Finland, of course you do.

Gaye Francis (07:42):

Explain.

Richard Robinson (07:43):

The Fins have their world set up for an invasion. They're all trained, they're all ready to go, and they can put every member of their community into a secure facility in the event of war. True or false? You've been telling me about this. Not me. <laughs>

Gaye Francis (08:02):

They all do national training and yeah.

Richard Robinson (08:05):

And when they design something like a subway or an underground station, they design it so it becomes a bunker that they can protect themselves against just about anything.

Gaye Francis (08:13):

Yeah, true. I guess I never thought about it like that as a...

Richard Robinson (08:16):

But you've been telling me. <laughs>

Gaye Francis (08:19):

I think one of the other interesting things, Richard, was the sort of perception that you got that things are being done in silos. So the whole wasn't considered. So it was being thought out from a commercial aspect or an environmental aspect and not maybe from the whole of organisational aspect or whole of community aspect. And what was surprising to me, I guess, because we do a lot of our stuff from a safety perspective, there wasn't much discussion about the relationship between the safety aspect and resilience.

Richard Robinson (08:56):

Well, and that was interesting too, because one of the things we've noticed that safety can actually drive a solution. In fact, one of the speakers did make the point that when you look at when there's a disaster or an emergency, like during COVID and various things like that, we were really good at making rapid decisions on what was best as fast as we could get there.

Gaye Francis (09:13):

And finding resources to make things happen.

Richard Robinson (09:17):

But once the disaster was over, we just sort of slump back to whatever slow decision-making process we were previously used to. That's not particularly helpful. You would have thought that we could actually do better than that.

Gaye Francis (09:27):

And I think it is bringing that idea of resilience into a proactive manner rather than making it reactive. And that changes the way that people think about what resilience is.

Richard Robinson (09:40):

Yeah, because it has been a term which a lot of people use, which everyone sort of understands, but it's sort of gone to the same category as risk because it's a term everybody uses with great enthusiasm.

Gaye Francis (09:50):

Correct.

Richard Robinson (09:51):

And yet when you actually try to investigate what they mean by it, there's a general underlying confusion.

Gaye Francis (09:57):

And it means different things to different people depending on the context in which you find yourself.

Richard Robinson (10:02):

That's correct. I mean, we keep noticing that in our courts and our legislators actually use it as a noun and a thing in itself, the risks. And then they talk about the risk associated with the hazard, meaning it's a description or an adjective associated with it. And that's sort of a basic fundamental problem. And that's even in the legislation.

Gaye Francis (10:18):

When Jordan (Bartlett) used the term resilience in his particular presentation, it was the buildup to a certain capacity. You've defined a capacity that you can achieve for a fit for purpose and you can be resilient to that capacity and then disaster results once you exceed that capacity.

Richard Robinson (10:40):

Yeah. Well, it's interesting because that's a bit like in a cabinet in confidence stuff we were doing for the water utilities. I mean, how long should a water utility be able to supply water if there's a loss of power and deal with sewage and is it eight hours, 24 hours or two days? Obviously it'd be nice if it was two days, but it would cost an awful lot and that's where you have to balance those community...

Gaye Francis (11:00):

Expectations.

Richard Robinson (11:01):

You can't do it just within a silo. I think that was the main takeaway, wasn't it?

Gaye Francis (11:05):

I think that was the main takeaway. I think there are a couple of main takeaways for us. It's top down. You really have to articulate and define what you're trying to protect. It can't be done in a silo. And I think you've got to consider the collective. So it is the safety aspects. It is the disruption aspects. It is the commercial aspects. It is the community expectation. So all of that needs to be articulated and then what you can put in place. And I think that's where that SFAIRP provision comes in because you're really saying not just from a safety viewpoint, here are the controls that we can put in place or the precautions we can put in place, what are reasonable in the circumstances?

Richard Robinson (11:47):

Yeah. Well, I think that's what we took it to be a moral imperative. And I think that's what the parliaments basically were trying to say. They were taken chiefly from a safety viewpoint, but as we've pointed out, Victoria's thrown it into environmental legislation and there's no particular reason that it couldn't actually be thrown into other areas if we chose to do it.

Gaye Francis (12:05):

And I think that was one of the other comments from one of the presenters that risk analysis doesn't necessarily get you over the line for issues of resilience.

Richard Robinson (12:17):

Correct. I agree with that.

Gaye Francis (12:19):

And that's primarily because risk is really poor at dealing with high consequence, low likelihood events, regardless of what they are. So if you take the SFAIRP or due diligence approach, then you can do it that way.

Richard Robinson (12:32):

And resilience is all about what can be done. So it's an options analysis, which is the point you're making, which is what I guess an awful lot of the presenters that we've been listening to for the last few years are achievely saying.

Gaye Francis (12:44):

Yeah. So I think resilience is absolutely critical, especially in the risk management or the due diligence space. If you can be proactive rather than reactive, that'd make a huge difference. And if you take the due diligence approach, the SFAIRP approach, you will get an action list of things to do.

Richard Robinson (13:04):

Well, you've gone through the hierarchy, you eliminate it if you can, you prevent it if you can. If you can't do that, you can mitigate it. And I tend to regard resilience as an aspect of mitigation for the big things that you really can't fix preventativly.

Gaye Francis (13:18):

Outside of your control.

Richard Robinson (13:19):

Correct.

Gaye Francis (13:20):

But then you're talking about disaster recovery or recovery access.

Richard Robinson (13:24):

That's right.

Gaye Francis (13:25):

So I hope you found that interesting. Thanks for joining us today, Richard. See you next time.

Richard Robinson (13:29):

Thanks, Gaye.