Governance and Accountability of Public Risk

• Published date: 01 August 2014
• Author: Tina Harrison,Galina Andreeva,Jake Ansell
• Date: 01 August 2014
• DOI: http://doi.org/10.1111/faam.12036

Financial Accountability & Management, 30(3), August 2014, 0267-4424

Governance and Accountability

of Public Risk

GALINA ANDREEVA,JAKE ANSELL AND TINA HARRISON∗

Abstract: Risk represents the unknown future: an intangible commodity. Public

risk may affect any part of society and government is expected to respond, implying a

need for governance and accountability. Public risk governance though is complicated

by the multiplicity of different stakeholders and the network of interactions. We

explore public risk governance through the actors involved in public risk governance

and accountability. Through synthesis of the related and theoretically consistent

concepts of governance, stakeholder theory and social network theory we develop

the concept and underlying principles of ‘knowledgeable supervision’ as a means of

public risk governance.

Keywords: risk, public risk, governance, public sector, knowledgeable supervision

INTRODUCTION

The discourse on ‘good’ governance of public risk requires a theoretical

framework for the governance and accountability. The framework can be

synthesized from related and theoretically consistent concepts of governance,

stakeholder theory and social network theory. Arising from this we propose the

concept of ‘knowledgeable supervision’ as a means of governance.

Several recent events can be defined within the sphere of public risk:

the Japanese earthquake, tsunami and nuclear reactor disaster (Strickland,

2011); the financial crisis (Brigo et al., 2010); the UK telephone hacking

(BBC News, 2013a); Norwegian killings (BBC News, 2012c); and English anti-

austerity riots (Rogers et al., 2011). The nuclear reactor disaster, the telephone

hacking and the financial crisis can be regarded as failures of management

∗The authors are all from the University of Edinburgh Business School. They would like to

thank the Risk and Regulation Advisory Council for support for the initial part of this work

and the anonymous referees.

Address for correspondence: Professor Jake Ansell, The University of Edinburgh Business

School, 29 Buccleuch Place, Edinburgh EH8 9JY, UK.

e-mail: J.Ansell@ed.ac.uk

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GOVERNANCE AND ACCOUNTABILITY OF PUBLIC RISK 343

or values/beliefs within organisations/society, but arguably illustrate a deficit

in public risk governance. A distinction can be made between risks that

are preventable (financial crises and telephone hacking) or unpreventable

(earthquakes and tsunamis); this will influence the nature and scope of risk

governance.

For unpreventable risks, ‘Acts of God’, the focus is on government intervention

to control the impact and consequence of the risk (i.e., government can

implement building regulations to ensure buildings can withstand the impact of

earthquakes); the lack of or poor implementation can be regarded as a failure of

risk governance. For preventable risks, the scope of risk governance is arguably

wider including prevention or minimisation as well as management of the impact

and consequence of the risk.

‘Public risk’ as a concept is not well-established in academic literature

(Burgess, 2009), and so provides an inspiration for the current paper. Since

the events listed above can be viewed as failures to manage risks, the

emphasis is given to governance and accountability. Thus, it is necessary

to consider all stakeholders affecting or affected by the governance of the

risk, their role and salience both individually and collectively as a network of

stakeholders.

Public risk encompasses a diversity of risks from natural hazards, engineering,

finance and social domains: anything likely to have an impact on the public.

Each domain can be regarded as discrete, described as ‘Archipelagos of Risk’

(The Royal Society, 1992). This has provided a rich set of approaches for

managing risks, but also many divisions in the methods taken. Hood et al.

(2001) provide a typology of approaches through the concept of ‘risk regulation

regimes’.

Different technologies and regimes have been developed to address the

specific form of risk within each domain, leading to each domain developing

a separate language of risk: a ‘Tower of Babel’. ‘Risk appetite’, common

in Enterprise Risk Management (COSO, 2004), may be an anathema to

those working in safety who would suppose there is no appetite for risk.

Similarly, risk analysis has a different meaning in industrial risk and financial

risk management; the former quantifying the probability of a known event

occurrence (Pat´

e-Cornell, 2002) and the latter identifying and assessing factors

that may affect the success of achieving the goal.

A key dilemma for public risk governance is how to develop an appropriate

form of governance (and accountability) that deals with both the specificity

and the generality of the risk context. A single ‘recipe’ or an approach geared

too closely to a particular context may run the risk of being too narrowly

focused or even distorted by the specific context. The Basel II Accord for the

regulation of banking aimed to calculate the level of capital to be set aside

as the buffer against unexpected risks (Haldane, 2011) but failed to protect

several banks from the capital shortages in the recent financial crisis. A further

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