Tool 1: Exploring the Risk Context

This section of the Climate Change Adaption Toolkit details Tool 1.
Tool 1 involves a series of workshops, where users take a priority climate change risk through the following steps:  
  1. Analyse risk context (Activity 1)
  2. Explore the implications of uncertainty on the risk and its context (Activity 2)
  3. Develop a problem statement summarising the main aspects of the risk and risk context (Activity 3).
More detail on each of these steps is provided below.


Understanding the context for adaptation

Climate change has generated a new series of risks for organisations. Some build on or exacerbate the consequences of existing risks, and others create new linkages between risks. It is the interaction between environmental, social or economic stressors and climate change impacts that generates these new risks, rather than climate change acting alone. This adds to the management challenge. Some climate change risks will have more immediate implications, and the impact of others will only be felt at some point in the future.

Given the potential broad-ranging impacts of climate change across organisations’ operations and functions, positioning the organisation to address these risks – also known as ‘adaptation’ – is an essential component of effective and efficient risk management. Adaptation involves managing our social structure, economy, built environment and regulatory structures to better cope with an increasingly variable and volatile climate. This can occur either through anticipating what may happen, or by responding to an actual climate change impact. For most organisations these adjustments will occur across three distinct areas:

  • Internal operations – ensuring its systems are responsive and able to respond to shocks
  • Services to the community – maintaining standards of service delivery to the community in the face of more extreme and variable conditions
  • Staff/community expectations – ensuring staff and the community understand the role of the organisation in managing climate change impacts, including where its responsibility ends.
Actions taken across these areas need to recognise that how we experience, or are able to respond to, climate change will depend on broader trends and realities in our environment, from the condition of our economy, to the pollution in our rivers, our population, social and family ties and general level of affluence.

There is now broad recognition that effective risk management is central to good organisational management. According to ISO31000, the international standard for risk management, ‘[r]isk management helps decision makers make informed choices, prioritise actions and distinguish among alternative courses of action.’ It defines risk as ‘the effect of uncertainty on objectives.’ With regard to climate change risk, uncertainty pertains to the timing, extent and geographic location of climate impacts, as well as to broader societal trends that will dictate the consequences of these impacts,

Given the potential broad-ranging impacts of climate change upon an organisation, its risk management should explicitly recognise and incorporate climate change risks and treatment options (or ‘adaptation actions’). The uncertain and multi-facetted nature of climate change risks requires detailed processes that directly address uncertainty and complexity.

This is consistent with best practice risk management, which stresses the importance of explicitly including uncertainty, understanding the nature of that uncertainty, and exploring options for how it can be addressed (see ISO31000).


[Back to Top]

Prerequisites and materials required

Before beginning to implement Tool 1 you should have at least:

  • A list of priority climate change risks (more detail on assumed preparatory work is provided below).
  • For the workshop you will need:
  • large sheets of butchers paper
  • Post-it™ notes
  • Detailed Risk Analysis worksheet (refer to Appendix A)
  • Uncertainty Overlay worksheet (refer to Appendix A)
  • Problem Statement (refer to Appendix A)

During the process you may find the need to obtain more information or involve additional personnel. This may extend the time required for the workshops and the implementation of the Tool 1 activities.


[Back to Top]

Assumed preparatory work

At this stage, it is assumed that you will have a set of priority climate change risks, which may be obtained from your organisation’s risk register or through a separate climate change risk assessment (refer to Introduction, Assumed preparatory work). You will take these risks through Tool 1 to explore the risk context and Tool 2 to develop adaptation actions.

The following process assumes that the priority climate change risks have been carefully and accurately specified. Precise articulation of risks is vital in clearly understanding their context, possible consequences and uncertainty, and in formulating adaptation actions. Good risk specification involves ensuring risks are sufficiently specific and reasonably concise. The description of each risk should:

  • Create a clear picture of exactly what is likely to be impacted by the risk and how. Only when a risk is defined at an appropriate level of specificity can it be meaningfully rated and prioritised.
  • Relate to climate change adaptation, and not the consequences arising out of possible climate change mitigation efforts (i.e. greenhouse gas reduction activities). This applies only for the purpose of determining adaptation actions.
Common problems that occur with risk specification are outlined below. This may provide assistance as to how to improve your risk specification. Alternatively, there are many publications that provide details on how to identify risks. The Australian Greenhouse Office has provided extensive guidance on undertaking a risk assessment within an adaptation context.

AGO, 2006, Climate Change Impacts and Risk Management, A Guide for Business and Government, accessed 14/08/12.

Common problems with risk specification

Insufficient risk specification:

'Increasing cost of assets’ is comprised of multiple smaller risks, for example:
  • Risk of increased cost of maintenance of assets from increased extreme events
    Risk of cost of retrofitting assets to maintain function given increase in extreme events
    Increased cost to the organisation from retiring assets early because they are no longer fit for purpose.
  • ‘Coastal inundation’ as a risk can also be broken down much further, for example:
    Decrease in property values due to coastal inundation
  • Incurring additional expense due to defending planning decisions on coastal properties
    Loss of biodiversity or ecosystem integrity in fragile coastal ecosystems
  • Cost of relocating coastal roads.
The risk does not relate to the impacts of climate change and adaptation

For example, ‘increased electricity costs due to imposition of a carbon price’ relates to risks associated with reducing our greenhouse gas emissions through national legislation, and not to climate change adaptation. Although such risks may be legitimate and important risks to consider, this process is not designed to consider climate change risks other than those related to climate change impacts and adaptation.


[Back to Top]

Overview of Tool 1

Tool 1: Exploring the Risk Context aims to explore in more detail previously identified key risks. This step will place the priority climate change risks in their broader social, economic and environmental context, and seek to understand exactly how uncertainty associated with changes to this broader context, impacts our understanding of the risk. Figure 1.1 illustrates the key activities included within Tool 1.

Flow diagram that visualises how activites 1, 2 and 3 relate to each other
Figure 1.1: Overview of Exploring the Risk Context tool
The picture is a flow diagram that visualises how activities 1,2 and 3 of Tool 1 relate to each other. This detail is also outlined in the text below the diagram.

The tool includes three worksheets that are designed to be used in a series of workshops that should involve a wide range of stakeholders from across your organisation. The workshops should include staff from all divisions likely to be affected by risk or adaptation actions. Which individuals should attend will depend on the risks and actions that you are considering. The number of workshops will accord with the number of priority climate change risks that you have identified. The length of the workshop can be determined based on your needs and circumstances. However, experience has shown that workshops of less than 1.5 hours usually do not provide enough time to get through the activities contained in Tool 1. Upfront investigation of the risks and risk context questions prior to the workshop will reduce the time requirements. Despite any such preparatory work, it is likely that you will need to seek out further information at different times in the process and come back to update the analysis.

Tool 1 contains the following activities:

  • Activity 1: Detailed Risk Analysis consists of a worksheet that takes you through a series of questions designed to explore a priority risk in more detail and define the risk context. This additional detail will enable you to develop more robust and effective adaptation actions.
  • You may not have all the information required to answer the questions. It is a matter for your discretion whether you seek, or commission someone to find, missing information before you progress to the next activities.
  • Activity 2: Uncertainty Overlay is a worksheet to be completed after Activity 1 and is designed to sit alongside the Activity 1 worksheet, to allow users to explore the implications of uncertainty on the broader risk context.

    Activity 3: Problem Statement is a worksheet to be completed at the end of the process. It provides a template to give a succinct overview of a risk and its associated uncertainties. The Problem Statement is designed to be the input into Tool 2: Developing Adaptation Actions.
All worksheets are provided in Appendix A.


[Back to Top]

Output

The output from this stage will be a collection of background information to be stored on the risk management system (or climate change risk register), and a problem statement. In the Problem Statement, users will draw together the information gathered in Activities 1 and 2 into a descriptive yet succinct statement of the risk and its associated context and consequences. This should include the impact of uncertainty, timeframes and a synthesis of the broader risk context.



[Back to Top]

Activity 1: Detailed Risk Analysis

The first activity takes a specified and prioritised climate change risks and assists you to further analyse it. This in-depth analysis must occur before any adaptation actions (or ‘risk treatments’) are generated. It is essential to appreciate the broader risk context, as this understanding can inform the process of identifying adaptation actions.

The following guide to the Activity 1 worksheet explains the questions and information required for answering them. If workshop participants find answering these questions difficult they need to reconsider how they have specified each risk. Frequently, lack of risk specificity becomes evident at this stage. Common specification problems were outlined above. In some instances, further investigation and discussion will be required before the questions can be adequately answered.

Not all of the questions will be relevant to every risk. However, they provide examples of the types of information that are required to develop adaptation action options, and it is therefore important to thoroughly consider all questions.

(1) Who or what will be affected by the risk? Consider what system, asset, or group of individuals will be affected. What is the boundary of the risk?

  • This question considers whether there is a particular system that maybe affected by the risk. The system could include a geographic region, community, piece of infrastructure, ecosystem or economic sector. To successfully explore this question, you need to consider what element or attribute of the system is most at risk – for example, the viability of an economic sector, or the structural integrity of a pipeline.
  • You also need to consider where boundaries can be drawn around the impacts of each risk (see Box 1-1 below). These can be, for example, geographic, administrative or socio-economic boundaries, or a temporal boundary where risks can be limited to a certain period in time. Being realistic about what each of the risks encompasses will be very important for developing adaptation actions. Take, for example, a risk to the economy – it may be tempting to restrict the boundaries of that risk to the local level to make it more manageable. However, the reality may be that the impact is broader, and this should be properly considered.

Box 1-1 : Examples for drawing boundaries around climate change impacts

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • System: the bushland
  • Attribute: its health and viability
  • Boundary: geographic boundary determined by what is considered ‘peri-urban’ and the extent of bushland in that area

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • System: roads
  • Attribute: structural integrity or viability
  • Boundary: all roads under the organisation’s control made of the relevant material

Priority risk: ‘Health impacts due to an increase in frequency and intensity of heat waves’

  • System: members of community particularly vulnerable to heat stress
  • Attribute: health and life
  • Boundary: only those people within organisation’s sphere of influence


(2) What is causing the risk?

Every risk can have multiple causes, or risk sources. These can be climatic, non-climatic, or a combination of both risk sources. This question considers what the multiple causes and drivers of a risk are (see Box 1-2).

The climatic risk source is the influencing climatic or biophysical stressor, caused or exacerbated by climate change that underlies the risk. For example, sea level rise is a risk source that puts some coastal infrastructure at risk, as is the increased frequency of heat waves for people vulnerable to heat stress. Many systems and assets are vulnerable to multiple climatic risk sources. For example, risks to outdoor infrastructure may arise from sea level rise, extreme heat, bushfire, or storm damage. It is important that all climatic risk sources are outlined for each prioritised risk.

Climate change impacts, however, do not occur in isolation. They can be compounded by other impacts, trends and pressures. These can be economic, social, environmental or political. It is important to determine all key trends that make up the risk context, to assist in the process of identifying adaptation actions.

It is particularly important to isolate any significant social or economic trends that may either increase or decrease the severity of the risk. This may be a tricky process. It is not necessary, however, to be exhaustive, i.e. it is not required to devote hours of research and consulting relevant experts. Rather, try to ensure that you have identified those ‘bigger picture’ trends that stand out as having the most relevance within the given risk context.


Box 1-2 : Examples of climatic and non-climatic risk sources for identified priority risks

Priority risk: ‘Increased fire risk to peri-urban bushland’

  • Multiple climatic risk sources:
  • Increased temperatures
  • Changed rainfall
  • Wind patterns
  • Non-climatic risk sources:
  • Urban growth: demographic or economic trends that result in more people building near fire prone areas (could either increase or decrease the risk depending on the nature of the urban growth).
  • Regulation: new biodiversity legislation that limits the amount of fire prevention that Council can perform (increases risk).
  • Co-ordination: greater co-ordination amongst state-wide fire authorities to ensure a more effective and co-ordinated response to fire (decreases risk).

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • Single climatic risk source: increased number of heat waves.
  • Non-climatic impacts, trends and pressures:
  • Change in road usage patterns: there may be plans for a new road to be built outside the municipality that will take a large amount of the freight traffic away from Council roads, decreasing wear on road surface (decreased severity of risk).
  • Demographic shifts: there might be an anticipated growth in municipal population that may increase the traffic on managed roads and therefore decrease lifespan even without increased heat (increased severity of risk).

Priority risk: ‘Health impacts due to an increase in frequency and intensity of heat waves’

  • Single climatic risk source: increased number and intensity of heat waves.
  • Non-climatic risk sources:
  • Demographic characteristics influencing vulnerability to heat: for example age or illness
  • Social trends: for example, greater number of individuals living alone or disconnected from their community
  • Housing trends: how the built environment is designed to withstand heat waves.

(3) Why is the organisation exposed to the climate change risk?

This question considers whether a system is exposed to the impacts of a given risk source. That is, if and to what extent that system experiences a particular climatic risk source, such as sea level rise or heatwaves, and why this is the case. It could be due to, for example, location and local geography, topography, or due to prevailing weather patterns. Not all places will be exposed equally to all the risk sources associated with climate change: inland communities, for example, will not be affected by the direct impacts of sea level rise.

As an example, consider two coastal communities. Community 1 is located on a low-lying tropical island, whereas Community 2 is on the south-west coast of Tasmania, on granite cliff-tops. These two coastal communities have very different exposures to climatic risk sources by virtue of geography: Community 1 is exposed to both changes to tropical cyclone strengths and storm surges, whereas Community 2 has no such exposure due to its cliff-top location in higher latitudes.


Example of key exposure factors

A community can be exposed to the impacts of extreme rainfall for the following reasons:
  • Topography (for example, mountainous terrain can result in flash flooding events)
  • Land use (for example, flood plains being used for housing or agriculture)
  • Climatic location (for example in tropical, sub-tropical or arid climate)
  • Physical infrastructure (for example, the structure and location of roads and bridges)
The answers to this question will be a list of the key factors that determine the exposure of your system to a prioritised risk.


Box 1-3: Examples of system exposures for identified priority risks

 

Priority risk: ‘Health impacts due to an increase in frequency and intensity of heat waves’
  • Exposure: People without access to air-conditioning or other forms of cooling will be particularly exposed, because they lack the ability to change their circumstances when an extreme heat wave hits. Outdoor workers are more exposed than office workers, and cyclists are more exposed than most car commuters.

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • Exposure: The placement of the road in a hot location, exposed to the elements.

Priority risk: ‘Increased fire risk to peri-urban bushland’

  • Exposure: Presence of bushland close to urban setting and in an area with a climate conducive to bushfires.


(4) Are there any assets, communities or locations particularly sensitive to the risk?

In climate change terminology, ‘sensitivity’ (see below for explanation) describes the extent to which a system responds to a climate impact or risk source. To illustrate the concept using a well-known fairy tale, although all three little pigs’ houses were exposed to the huffing and puffing of the wolf, the house of straw and the house of sticks were both far more sensitive to the wolf’s huffing and puffing than the house of bricks, and they fell over. By way of a real life example, irrigated agriculture, as an economic sector, is more sensitive to rainfall changes than the IT industry.

Note that there is overlap between the concepts of exposure (see above) and sensitivity. If there seems to be no clear division between the two in the case of your risk, do not spend too long trying to create an artificial division.

Factors that influence sensitivity:
  • resilience (namely, how well a community is able to ‘bounce back’ to its former state after experiencing a shock and be able to better respond to future challenges)
  • emergency planning and preparedness
  • technology
  • infrastructure design
  • governance
  • regulatory structures
  • social and cultural values
  • organisational capacity
  • internal/external communications
  • training
  • knowledge/information.
The sensitivity of your system to a priority risk should be outlined, with simple explanatory sentences describing how and where the sensitivities lie. See the examples in Box 1-4 for some ideas.


Box 1-4: Examples of system sensitivities for identified priority risks

Priority risk: ‘Health impacts due to an increase in frequency and intensity of heat waves’
  • Sensitivity: The elderly and those with cardio-vascular diseases are more sensitive to the increase in heat than other groups of the population.

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • Sensitivity: Influenced by the choice of initial construction materials for the road, and their inability to maintain viability under hotter conditions. The choice may have been mandated by design/construction guidelines.

Priority risk: ‘Increased fire risk to peri-urban bushland’

  • Sensitivity: The type of vegetation in the bushland – for example, eucalypts are particularly prone to catching fire.


(5) Does the risk affect the organisation’s objectives/obligations/strategic directions? If yes, describe.

ISO 31000 defines risk as ‘the impact of uncertainty on an organisation’s objectives’. This emphasises the need to consider how this risk will impact your organisation’s operations. In particular it is important to consider whether and how the risk relates to your organisation’s broader objectives, as determined by a strategic plan and in key performance indicators (KPIs). Knowing how climate change risks integrate with your organisation’s priorities and strategic directions will assist you in determining the priority of a given risk and in building a case for action.


Box 1-5: Examples of strategic objectives/obligations/directions that may affect the risk

 

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • The relevant strategic objective might relate to maintaining or enhancing the municipality’s biodiversity and green spaces.

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • A plausible organisational objective would be ‘to maintain safe and functional roads for the community under the sustainable built and natural environment strategic direction’. Clearly, this risk impinges directly on Council’s ability to meet this objective.

Priority risk:‘Health impacts due to an increase in frequency and intensity of heat waves’

  • A strategic direction about ‘fostering healthy and vibrant communities’.


(6) What is the time period of the risk?

This requires consideration of the time period within which an asset or a system is or becomes vulnerable to climate change impacts. In some circumstances, it can determine the urgency of action. Defining the time period is particularly important in considering when action will need to be taken. This may be quite soon, where the risk is associated with long-lived assets and decisions need to be made now that will have implications when a climate change-related impact begins to be take effect.

This may not be easy to define in the context of a single workshop and may require additional research. It may also be a question that ultimately cannot be answered by current knowledge.

Information on certain types of climate change risks are being continually released and updated. Risks such as sea level rise and bushfire are likely to have a lot of information available. It is useful to document situations where the time period for a given risk is unknown or uncertain. More information on exploring the source and impact of uncertainty is provided in Activity 3 of Tool 1.

Examples include the National Climate Change Adaptation Research Facility (NCCARF) and CSIRO

Box 1-6: Examples of risk time periods

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • Time periods: The risk sources are increasing temperatures and changing rainfall patterns, as well as changes to urban development. These are all slow-onset, gradual changes.
  • Temperature rise: has been observed as already happening.
  • Changing rainfall patterns: the time period of rainfall changes due to climate change is still largely unknown and varied across space.
  • The urban development may well be already occurring, and certainly intra-Council planning will have commenced in terms of future development of the City area.

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • Time periods: The assumption is road surfaces normally last 15 years. Increased numbers of days with temperatures over 40 degrees have already been witnessed. Construction of new roads and re-surfacing of existing roads (given their lifespan) will need to start factoring in near-term temperature.

Priority risk: ‘Health impacts due to an increase in frequency and intensity of heat waves’

  • Time periods: Heat waves already impact human health, so addressing this should start immediately (and probably has already started), with a view to this impact and intensifying gradually over time.


(7) Does the risk potentially reinforce or exacerbate existing social disadvantage or inequalities? If yes, describe.

As part of thinking about the broader context of the risk, awareness about equity is particularly important. The impacts of climate change risks will not be homogenously distributed across the community. Often, groups that are already socially or economically marginalised will feel them disproportionately, exacerbating existing disadvantage. This non-uniform distribution of social impacts may also create new inequalities or vulnerabilities. These implications will be important for thinking through and devising adaptation actions.


Box 1-7: Examples of priority risks that may exacerbate existing disadvantage of inequality

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • Exacerbate existing disadvantage: Those people who cannot afford to move out of bushfire prone areas or fire-proof their houses. This may result in them being disproportionately vulnerable to bushfires.

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • This risk is more about the financial bottom line, i.e. the cost of road maintenance, than about social impacts. It is not obvious how this risk may lead to social disadvantage.

Priority risk: ‘Health impacts due to an increase in frequency and intensity of heat waves’

  • Exacerbate existing disadvantage: This may disproportionately impact the elderly, the poor and the socially isolated. These groups may, for example, lack the social networks, the ability to pay for or access air-conditioning (or other forms of cooling) or good health to withstand the heat. This may result in them being disproportionately affected.

Priority risk: ‘Sea level rise impacting coastal development’

  • Create new inequalities: This may cause people who have invested a considerable amount of their savings in a coastal development to become a newly disadvantaged group, as property values drop due to sea level rise becoming evident.


(8) Are there already preventative measures in place that would help deal with the risk (either implemented by the organisation or another entity)? Where relevant, how have they performed?

Given that no climate change risks occur in isolation, and generally just exacerbate an existing issue, there may be situations where preventative or protective measures are already in place. These could be civil society groups, legislative frameworks, codes of conduct aimed directly at decreasing that specific risk or to impact factors that contribute to the risk. Exploring existing attempts, including how well they have performed, can minimise duplication or inform the development of new adaptation actions.


Box 1-8: Examples of preventative measure that may be in place to treat a priority risk

 

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • State government departments are already engaged in researching and conducting fire reduction strategies.
  • There may be an overlap in legislative and regulatory regimes aimed at protecting an ecosystem. This may create confusion and inconsistency between regulatory measures designed to protect the ecosystem and those designed to minimise fire risk.
  • The Royal Commission into the Victorian Black Saturday bushfires provides a comprehensive review of bushfire and emergency response in Victoria. The report provides not only useful insights into reforms required in emergency management, but also provides insights into how individuals approach risk and useful learnings from the fateful day.

Priority risk: ‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • There may be some experimental road surfaces already tested or in use in other climatic zones that may be better suited to withstand extreme heat.

Priority risk: ‘Health impacts due to an increase in frequency and intensity of heat waves’

  • If providing health services to the community is already a business function, existing plans and networks may exist to support vulnerable people during heat waves.
  • There may also be some additional formal and informal community-based groups, charities or networks that are working independently on community-level heatwave response.


(9) Is the organisation prepared for or capable of dealing with the risk impacts now? Describe.

This question refers to adaptive capacity, which is a key determinant of vulnerability. It assesses the capacity of a system, or elements of that system, to change how a climate change risk will impact upon the system – through, for example, having the ability to change human behaviour, moving away from the climatic risk source, or through having the funds available to build appropriate defence structures.

Adaptive capacity depends on factors inherent in the systems such as:

  • diversity of actions, participants, relationships, networks within the system
  • degree of flexibility and redundancy in how parts of the system relate and interact
  • the system’s ability to learn, self-organise and solve problems
  • other sources of social disadvantage, including income, disability, job security or food security.
These factors should be considered as part of analysing the risk context, as they provide useful insights into potential adaptation actions. The examples below outline how some adaptive capacity factors link to the sample risks.


Box 1-9: Examples of ways in which organisations could deal with the risk impacts now

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • There may already be good working relationships between management organisations, community organisations and relevant government departments to co-ordinate bushfire risk reduction activities, share knowledge and build linkages.
  • Restrictive legislative regimes relating to removal of native vegetation and management of parks may limit the flexibility of relevant organisations to respond to the bushfire threat.

Priority risk:‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • There may be strong research collaborations existing between universities and government authorities that could be used to drive innovation in road surface design.

Priority risk: ‘Health impacts due to an increase in the frequency and intensity of heat waves’

  • Strong, active community and grassroots networks are an indicator of adaptive capacity. Such networks can be used to minimise the impact of heatwaves, through community-level monitoring of and assistance to vulnerable individuals.


(10) Linkages – which other organisation/departments/community groups/sectors have either responsibility for or an interest in this risk? Should joint management be considered?

To define and manage the organisation’s responsibility for climate change risks and to increase its adaptive capacity, it is essential for an organisation to form links with other groups. Strong, well-functioning linkages with external organisations (community, private sector, government, research) can be considered almost as important as strong internal relationships.

Close external linkages and relationships can assist with:
  • managing expectations
  • sharing information
  • minimising duplication
  • facilitating pooling of resources (people/knowledge/financial capital)
  • establishing clear chains of command, processes and responsibilities in relation to managing climate change risks
These links should be considered at the beginning of the process, as they will strongly influence the ability of an organisation to mitigate risk and outline where support could be required and/or sought.


Box 1-10: Examples of potential linkages with other parties

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • There may be research institutes, government agencies, management organisations who should be involved in managing this risk. Forming linkages with these organisations will assist the organisation in: keeping abreast of developments; implementing practical measures that will not detract from or duplicate existing initiatives; and building relationships that will assist in the event of unforeseen circumstances.

Priorityrisk:‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • Some government agencies, such as VicRoads, have an interest in this area. Establishing close ties with them could assist in terms of resourcing research and development and ensuring minimal duplication of effort.

Priority risk: ‘Health impacts due to an increase in the frequency and intensity of heat waves’

  • There are likely to be many community and not-for-profit organisations with an interest in or knowledge/networks relevant to this risk area.


(11) How often should this risk or class of risks be reviewed?

This question asks you to consider how often and under what circumstances this risk should be reassessed. Reviews could be triggered because:
  • A signpost event has occurred. A priority climate change risk may be one where sea level rise threatens a proposed development on the coast. If the land earmarked for the development is later rezoned to a nature reserve, a key event (namely, rezoning) has occurred that fundamentally changes the nature of the risk. The risk will need be reassessed, and possibly the risk re-prioritised.
  • Established knowledge has changed over time, or there is inherent variability that will need to be regularly reassessed. For example, if water restrictions affecting the condition of local parks and sporting fields is a key risk, regular reviews of its risk context material may be required due to the rapidly changing technical and political context in the water sector: the construction of a desalination facility, availability of new grass species, or changes to regulations governing water restrictions would all impact the priority and broader context of this risk.
Factors that may influence how often a risk should be reviewed include:
  • The nature and extent of uncertainty – if it is likely some uncertainty will be resolved in the near future (this will be dealt with in further detail in Activity 2 of Tool 1).
  • Time frame of anticipated impacts – if a particular impact will not be felt for some time, it may make sense to defer the risk, and reassess it closer to the time or when more information becomes available.
  • A key trigger event that will change the nature or priority of the risk.
  • Dependence of the risk on broader changes in the social, economic, ecological or political context.
  • Changes to the basis of the assumptions that underpin its prioritisation.
To complete the worksheet, it will be useful to note down answers or assumptions to the questions above, and then based on the answers articulate the proposed frequency of review.


Box 1-11: Examples of factors that may influence frequency of priority risk review

 

Priority risk: ‘Increased fire risk to peri-urban bushland’
  • Factors to influence or trigger review: A bushfire event; a change in a relevant piece of legislation or other regulatory instrument.
  • Regular reviews: The likelihood of a significant knowledge shift is minimal (a lot is known about fires already) and therefore this risk may warrant regular review. The risk may only be reviewed during standard reviews of the risk register as a whole.

Priority risk:‘Road surfacing material becoming unviable due to increased frequency of heat waves’

  • Trigger review: A breakthrough in possible road surfacing materials; a series of rapid and unexpected road deterioration in a particular geographic area.
  • Regular review: Given that there could be breakthroughs in road surfacing options, a regular review may be warranted. However, considering that roads aren’t replaced that frequently, an organisation may decide that a standard review during whole-of-risk-register reviews is sufficient.

Priority risk:‘Health impacts due to an increase in the frequency and intensity of heat waves’

  • Trigger review: An intense heatwave resulting in deaths.
  • Regular review: As for fire risk, knowledge is unlikely to leap forward rapidly and markedly, and heat wave management methods are fairly well established. For these reasons, a standard review period, aligned with the review of the entire risk register, may be deemed appropriate.



[Back to Top]

Activity 2: Uncertainty Overlay

This section relates to the worksheet called ‘Activity 2: Uncertainty Overlay’. It requires you to work through your answers to the questions given for Activity 1, to explore the impact of uncertainty.

Exploring how uncertainty attaches to the risk, and the implications of that uncertainty

One of the most important aspects of managing and understanding climate change-related risks involves appreciating how they are affected by uncertainty. Our society’s current governance and decision-making processes tend to be based on a model of ‘predict then act’. This approach is appropriate under conditions where our predictions can provide us with accurate information to inform our decisions and actions. This does not hold in circumstances where there is particularly problematic uncertainty, known as deep uncertainty. In such cases, predictions cannot be relied upon with any degree of confidence because it is impossible to correctly anticipate future conditions. Instead we need to operate on the basis of ‘explore, then test’. This means recognising the future is uncertain and we need to explore a wide range of possibilities, and then test how our decision performs under these alternative futures.

Central to this process is recognition that certainty (or the illusion of certainty) is seductive – because it makes problems much easier to solve. However, illusory certainty may mean you are not solving the actual problem and, instead, are creating new problems that will become apparent in the future. Appreciating the true nature of uncertainty requires decision-makers to be transparent and thorough when articulating where the uncertainty lies and the potential effect on the situation.

The Uncertainty Overlay worksheet comprises a table with the questions from Activity 1 of Tool 1. Activity 2 has been designed to assist you in understanding how uncertainty attaches to a priority risk. The questions help you articulate and analyse the implications of that uncertainty – as a basis for an ‘explore, then test’ model for climate change adaptation. Understanding this will enable you to develop more robust and efficient adaptation actions. The following section includes information to assist you in completing the table in Activity 2. It includes the following sections:
  • Categorising and describing uncertainty – to assist completing column 2
  • Resolving uncertainty – to assist completing columns 3, 4 and 5
    • Does the uncertainty need to be resolved?
    • Can the uncertainty be resolved?
    • What are the implications of the uncertainty on the risk?
  • Plan of action – column 6

See Hallegate, S. Shah, A. Lempert, R. Brown, C. and Gill, S. 2012, Investment decision making under deep uncertainty, Policy Research Working Paper 6193, Office of the Chief Economist, The World Bank, accessed on 1 October 2012

Categorising and describing uncertainty

Identifying uncertainty is very useful because it allows us to consciously break down assumptions that underlie how we have framed risks. This in turn allows us to determine the best way to address the uncertainty. The latter is particularly important, as different types of uncertainty have different implications for risk identification (or prioritisation) and developing adaptation actions.
There are many ways to categorise different types of uncertainty. The approach suggested in this Toolkit draws from two existing approaches, with a view to making them as accessible as possible. The categorisation is designed to assist users to think more deeply about uncertainty, ‘unpack’ it and be realistic about the prospects of resolving it.

The domains (neither exhaustive nor mutually exclusive) where uncertainty or incomplete knowledge can exist are listed below.

Social: Uncertainty relating to future demographic and social trends, including the ageing of the population, its future cultural or educational composition, the predominant values society holds, including how risks are perceived by the majority and the importance attached to them.

Scientific: Uncertainty relating to what is known or knowable through scientific investigation. How much do we truly know about the scientific basis, probability or possible consequences of a risk? For example, there may be uncertainty about how a given ecological system (such as a certain plant community) functions; or how certain chemicals will behave in the ‘real world’, as opposed to under strictly controlled laboratory conditions. Scientific uncertainty is difficult to evaluate, particularly for non-scientists, because typically a large number of variables need to be considered, which themselves can have uncertainties attached to them. As a simplified guide, scientific uncertainty can arise because:

  • The right questions have not yet been asked. For example, it took many decades before the link between chlorofluorocarbons (CFCs) and ozone depletion was understood, because no one perceived the need to ask the question or explore the association. This form of uncertainty is particularly hard to consider prospectively, because it comes down to ‘we do not know what we do not know’.
  • No one has been able to determine an answer. Often, this is because the answer is embedded in a complex system. For example, scientists have not yet determined exactly how sensitive the climate system is to carbon dioxide. This is because the answer depends on a vast number of interlinked feedback loops and variables, which we do not yet fully understand.
  • Contested information exists. Differences in interpretation of scientific data could exist between different scientists or different disciplines, leading to another form of uncertainty. For example, a lot of data points to increasing incidence of severe childhood food allergies, but researchers have yet to agree on a definitive cause or a set of causes, with many alternative, plausible explanations being offered.
Care must be taken when relying on science to resolve incomplete knowledge. Expert assistance should be sought, both in terms of understanding the assumptions behind the research questions and the exact boundaries of any research replied upon.

Technological: Many characteristics of technology we do know (or can readily determine, even if we do not currently know). For example, the temperature thresholds for the surfacing of particular roads or the wind speeds certain structures can withstand can be established using a variety of methods. Other elements, like the probability of a particular component failing within a certain number of years, can also be reasonably accurately quantified and predicted. But other aspects of technology use, such as future trends and evolution of technology, require subjective assessments and are therefore inherently more uncertain. It is impossible to know what future technologies will be developed, and how they may assist in responding to climate change risks, for example.

Economic: Uncertainty will arise as to prevailing future economic conditions and trends. Given the vast array of relevant international and domestic factors, projections of future economic performance and conditions involve a considerable amount of subjective judgment, often resulting in expert disagreement and many potential scenarios for how the global or national economy may perform in the future, and what ‘solutions’ may work best.

Political: It is also very hard to eliminate uncertainty relating to what future policies or regulations will shape our ability to act or the context in which we are acting. Policies are driven by politics, which are influenced by unpredictable human factors that are related to the broader socio-political context.

Hallegate, S. Shah, A. Lempert, R. Brown, C. and Gill, S. 2012, Investment decision making under deep uncertainty, Policy Research Working Paper 6193, Office of the Chief Economist, The World Bank, accessed on 1 October 2012
Stirling, A. 2007 ‘Risk, precaution and science: towards a more constructive policy debate’ 8:4 EMBO Reports, 309.

Types of uncertainty in climate change adaptation

Specific types of uncertainty surround climate change impacts, and some of these are directly related to the domains and examples provided above. The key question ‘what is the future climate going to be like?’ is complicated by three different sources of uncertainty:
  1. Uncertainty arising from our incomplete knowledge of how the climate system works. The climate is a highly complex system, and even without the added complication of climate change we do not yet fully understand how it is influenced by a range of variables, nor are all relationships between the variables known, particularly in terms of feedback loops that operate within the climate system.
  2. Uncertainty because weather is fundamentally chaotic and based on ever-changing contexts. The parents of a new baby cannot predict exactly what their child will be doing in 20 years’ time, as too many random and unforeseeable events will intervene to shape the outcome. Similarly, we will never be able to predict with absolute accuracy whether or where a hailstorm will develop in 20 years’ time (or even one month’s time) because the knowledge is wrapped up in a highly dynamic weather system (even if a model can tell us about how the average number of hail events will change).
  3. Uncertainty also arises because we do not know the extent or effectiveness of mitigation efforts. This will obviously have a very large impact on future climate. The more we mitigate, the less climate change adaptation will be required. This uncertainty becomes an increasingly dominant factor the further into the future we are trying to project.
For more detail, see the World Bank research paper


Resolving uncertainty

Within each category of uncertainty, decision-makers are left with the confronting question of how to resolve that uncertainty. Often this requires further investigation and consultation. This also applies to this Toolkit: as a user, you will need to investigate what types of uncertainty are involved to understand each climate change risk and come to a judgement about:
  • whether each case of uncertainty can be resolved
  • whether each case of uncertainty needs to be resolved in order to proceed with adaptation planning.
The possible impacts of the uncertainty on the risk context analysis can be summarised by the questions below:
  • Does more consultation on the risk need to occur before adaptation actions can be formulated?
  • Does the uncertainty have a significant impact on (for example) the probability of occurrence or the consequences?
  • Does it change our understanding of the broader implications of the risk or how or when we should start acting on it?
Sometimes the uncertainty will just have to be accepted, and incorporated into any adaptation action that is generated. More information on how to integrate uncertainty into adaptation actions is included in Tool 2.

Tables 1 and 2 below list some guidance to help you assess whether an uncertainty can, or needs to be, resolved, and the resultant implications for dealing with uncertainty, as seen from an organisational point of view. The assessment can be recorded in the Activity 2: Uncertainty Overlay worksheet.

Table 1: Implications of uncertainty from an organisational perspective
Does uncertainty need to be resolved?

Implications

Yes

If an uncertainty is critical to understanding a risk, or found to have a significant impact on any decision for responding to the risk, it will need to be resolved if such resolution is possible.
As a next step it is necessary to further investigate the type of uncertainty and establish whether it can be resolved (see Table 2 below).

No

If an identified uncertainty has minimal relevance to the risk context, less effort may need to be made to resolve it. In some circumstances, in can be appropriate to decide that uncertainty does not need to be resolved and that, instead, the type and degree of uncertainty are considered in the adaptation planning process, e.g. by choosing a more flexible option when developing adaptation actions.




Table 2: Options and implications for resolving uncertainty from an organisational perspective

 

Can uncertainty be resolved?

Implications

Knowledge exists, is accessible, and the decision-maker just needs to access it.

Knowledge gap can be filled by tapping into data or experts within or outside an organisation. For example, the probabilities and consequences of a specific risk are known but the organisation hasn’t to date used this information. This new information can be factored into a risk assessment, a prioritisation of the risk, and when devising potential adaptation actions.
This form of uncertainty may require additional investigation or consultation before work can commence on adaptation actions.

Knowledge does not yet exist, but could be generated with reasonable effort.

This might require some additional work to be commissioned. Decision-makers might need to assess whether the benefit of the additional information is worth the expense or effort to obtain it, or if the uncertainty could be worked around another way. Partnerships with research organisations may assist in generating the missing information.

Contested knowledge exists: relevant experts have opinions on the ‘answer’, but these opinions are either based on conflicting evidence or come down to subjective assessment or difference in ethics, morals or worldviews.

In these situations, depending on how central resolving this uncertainty is for understanding this risk, the uncertainty may need to be accepted, and a range of possible answers/outcomes incorporated into:
(a) reconsidering the priority attached to the risk (does the extent of the uncertainty mean it should be ranked higher?); or
(b) devising adaptation actions. The use of scenarios can assist in this process.

Knowledge does not yet exist, but there is a reasonable expectation that it could become available soon.

In such situations, decision-makers must decide whether to wait for the uncertainty to be resolved before starting to generate adaptation actions, or progress to determining adaptation actions despite the uncertainty. Either way, the risk and adaptation actions should be flagged for regular review, depending on how quickly the information is likely to be generated.
If the decision-maker decides to move to generating adaptation actions, these should be designed to maximise flexibility to ensure they can be updated when new information comes to light.
Action should not be delayed automatically on the basis of the expectation that uncertainty will be resolved at some point in the future. From a risk management perspective, delaying action on this basis needs to be a conscious and well-founded choice, rather than a default position.

Knowledge does not yet exist and is unlikely to become available.

Such irresolvable uncertainty should not be used as a reason for inaction. The impact of this uncertainty should be accepted and built into the problem definition and the solution. Practically, this may mean the full range of the uncertainty needs to be incorporated into:
(a) reconsidering the priority attached to the risk (does the extent of the uncertainty mean it should be ranked higher?); or
(b) into devising adaptation actions.



Plan of Action

Once the uncertainty has been categorised, described and consideration given to whether it needs to be and can be resolved and any implications that the uncertainty has on the risk, a Plan of Action needs to be developed. When completing the worksheet, it will be useful to revisit any assumptions that were noted when completing Activity 1 of Tool 1.


[Back to Top]

Activity 3: Problem Statement

The combined output of the Activity 1: Exploring the Risk Context and Activity 2: Uncertainty Overlay results in a number of possible outcomes for each risk considered including:
  • A decision that the risk no longer warrants priority climate change risk status. This may be because the uncertainty is deemed manageable, there are sufficient actions already in place, time frames are not pressing, or there are no relevant decisions required now for early action.
  • A ‘new’, well understood risk is identified from the material.
  • An area is identified where more research is needed, to fully explore risk before adaptation actions can be developed. It is important to be aware, however, that you may never have complete knowledge, and could continue researching some of these issues for a long time, wasting valuable resources and time. Being realistic about when you have enough information to start devising options in the face of incomplete knowledge is critical in this case.
  • A decision that the current level of knowledge/understanding is sufficient, and that you can progress to exploring adaptation actions.
For those risks where you have decided that the current level of knowledge/understanding is sufficient, one more step is required before progressing to Tool 2: Developing Adaptation Actions: writing a problem statement.

For each risk for which you have decided to develop adaptation actions, a problem statement is required to clearly articulate the risk, risk context and any uncertainties and assumptions associated with the risk.

This requires you to take the most salient elements of the risk context (Activity 1) and uncertainty descriptions (Activity 2), and prepare a brief statement that captures the problem that needs to be solved and issues that need to be addressed in any adaptation action. This will help you and your colleagues to consolidate your thoughts on the most important contextual elements of the risk and how uncertainty relates to these elements.

Key elements that should be captured succinctly in the Problem Statement include:
  • risk (the problem)
  • relevant context
  • potential consequences
  • uncertainty
  • potential timeframes
  • any signposts that indicate the risk is increasing.


Box 1-12: Example problem statement for a priority risk

 


Risk: Health impacts due to an increase in the frequency and intensity of heat waves

Problem statement:Although heat waves already occur, under a high-emissions climate change scenario they are highly likely to increase in severity and frequency. This will cause additional physical and emotional stress to individuals, particularly to vulnerable populations.

Although it is impossible to predict the timing and exact consequences of future heat waves, evidence suggests there will be more severe consequences and that those with physical limitations or financial incapacity will be particularly at risk of suffering injuries or death due to heat stress.

Council is responsible for emergency management in the local area and has a responsibility to assist with the wellbeing of its staff and local community.

Council should work with partner organisations and individually to try to minimise these adverse impacts of heatwaves. Issues include identifying vulnerable groups and individuals, partnering with relevant organisations and dealing with uncertainty over timing and extent of heatwaves.



[Back to Top]

Where to from here

Once your Problem Statement has been developed, you are ready to progress to Tool 2: Developing Adaptation Actions.

[Back to Top]

Toolkit Sections






Page last updated: Wednesday, 4 April 2018

Print