OECD Recommendation on the governance of critical risks

On 6 May 2014, following approval by the Ministerial Council, the Organisation for Economic Cooperation and Development (OECD) launched its Recommendation on the Governance of Critical Risks.

Aimed at senior national policymakers, the Recommendation’s five principles are designed to help countries strengthen resilience to sudden onset events (e.g. earthquakes, industrial accidents, terrorist attacks), gradual onset events (e.g. pandemics), and steady-state risks (notably those related to illicit trade or organised crime) that can disrupt infrastructure sectors vital to economic activities, lead to widespread damages and losses, degrade key environmental assets, negatively impact public finances, and erode public trust in government. 

As a member of the project Steering Group and a strategic partner of the OECD’s High-Level Risk Forum, Oliver Wyman was able to work closely with the OECD on the development of the Recommendation and will further support the OECD’s plans to underpin it with additional detail and best practices, which will be of value to country risk managers and private sector partners.

The Recommendation was launched at the same time as the OECD report on Boosting Resilience through Innovative Risk Governance, which looks at the losses incurred by OECD and BRIC countries over the past decade as a result of major natural and human-induced disasters, highlights the main governance obstacles facing risk reduction investments, and presents actions that governments can take to overcome them.

The Five Principles

  1. Establish and promote a comprehensive, all-hazards and transboundary approach to country risk governance to serve as the foundation for enhancing national resilience and responsiveness
  2. Build preparedness through foresight analysis, risk assessments and financing frameworks, to better anticipate complex and wide-ranging impacts
  3. Raise awareness of critical risks to mobilise households, businesses and international stakeholders and foster investment in risk prevention and mitigation
  4. Develop adaptive capacity in crisis management by coordinating resources across the government, its agencies and broader networks to support timely decision-making, communication and emergency responses
  5. Demonstrate transparency and accountability in risk-related decision making by incorporating good governance practices and continuously learning from experience

OECD Recommendation on the governance of critical risks