How Innovative Tech Is Changing The Way We Respond To Risk by Knowledge@Wharton
In the highly complex world of risk management, mistakes, shortcuts and a lack of planning or regulation can lead to grave consequences if and when disaster strikes. But the digital revolution of the past several decades has contributed a number of innovations to help risk managers craft more effective and airtight strategies for facing such situations.
At a recent conference marking the 30th anniversary of Wharton’s Risk Management and Decision Processes Center, experts in the field discussed new products and solutions for addressing challenges associated with current and emerging risks. Panelists noted that science and technology play a key role in improving the modeling of risks and developing strategies for reducing future losses and aiding recovery.
“A poor decision can turn a natural disaster into what in retrospect looks very much like a man-made catastrophe,” University of Pennsylvania Provost Vincent Price said in his introductory remarks to the conference. “Such a level of complexity demands input not only from numerous and varied academic experts, but also from experts both in the government and the private sector.”
More Predictable Weather
Perhaps no area has attracted greater concern among scientists and technologists than meteorology, where computerized modeling has “really advanced our understanding of the intensity of storms and [storm] tracks” over the past 15 years, noted Holly Bamford, former acting assistant secretary for conservation and management for the National Oceanic and Atmospheric Administration (NOAA). Bamford was recently named chief conservation officer at the National Fish and Wildlife Foundation.
A great deal has been achieved in terms of analyzing and predicting the intensity and track of storms, she noted, particularly as a result of major advances in radar. “This kind of technology is extremely significant for tornados and watching when a tornado actually hits and is causing damage,” Bamford said. “We’ve gone from just knowing that it is going to rain [today or tomorrow] to … businesses being able to plan knowing that rain is going to turn into sleet by 2 p.m. or 3 p.m.” Such advances allow schools or business to shut down early so people can arrive home before the worst weather hits, which in turn minimizes the potential human impact from severe weather.
“We’ve gone from just knowing that it is going to rain [today or tomorrow] to … businesses being able to plan knowing that rain is going to turn into sleet by 2 p.m. or 3 p.m.” –Holly Bamford
Tsunamis are another threat where technology has made it easier to manage risks. Bamford explained that in 2004, when the Indian Ocean earthquake and tsunami occurred, “we had six experimental buoys in the Indian Ocean that could detect tsunamis, and we had no global warning system.” Partially as a result, more than 200,000 people died in that event. “Today, we have over 40 tsunami detection buoys and we can not only detect a tsunami well in advance, but we can also detect storm surges from that [tsunami],” Bamford said, adding that there have also been numerous advancements in “understanding some of the supply chain risks, particularly in the climate and weather area.”
Looking to the future, Bamford said that the NOAA’s major challenge involves figuring out how to best use historic information, real time information and forecast information in the event of a disaster and getting that data to decision makers in time for them to act on it. Bamford highlighted key challenges in several different areas: First, improving NOAA’s capacity for risk communication. In 2011, “when a number of tornadoes touched down [in the U.S.], our forecast and understanding of those tornadoes was an A-plus. But in terms of the output, hundreds of people died. It wasn’t close to an A-plus.”
The agency held a public meeting to gain insights about how its response could be improved. Five hundred people came to the meeting, and the NOAA learned something unexpected: Giving people more advanced warning about the tornadoes and more lead time to take shelter didn’t save more lives. “What we saw was ‘more time, less lives saved,’” Bamford noted. “When people have a limited amount of time, they quickly and urgently [take] shelter. When they have more time [as in this case], people get into their cars. We expected people to take that information and actually take shelter. But if they have enough lead time, people don’t take the behavior you’re expecting.” Now, the agency is “incorporating social science early on into our decision making.”
A second challenge is to revamp NOAA’s pipeline for how it integrates information. Currently, NOAA’s storm forecast models and its river forecast models don’t necessarily communicate with each other smoothly. “People don’t care where the water is coming from; they just want to know when it is coming and how high it is,” Bamford pointed out. “So we are trying to integrate our science and data so we can do ‘total water analyses.’”
Although much of the discussion among experts at the conference concerned innovations undertaken by specialists trained in advanced sciences and technology, Robin Gregory, associate director of the Eco-Risk Research Unit at the University of British Columbia, noted that much of the innovation in long-term risk management is coming from the public. “Experts are surprised by that wealth of knowledge” emerging in public discussion groups and on social media, he noted.
And yet Gregory expressed concern about the unwillingness of many people to open up their thinking to viewpoints that are unfamiliar and emotionally unsatisfying, at least at first sight. A key question for him is: “How do you get people to move outside a concretized box and open themselves up to new views? Many people live in an environment where there is someone in the community — a priest, or imam or whatever — essentially telling them how they should think about issues. To get someone to open up to new points of view is something very difficult to do, but it is essential.”
“How do you get people to move outside a concretized box and open themselves up to new views?” –Robin Gregory
Another major challenge, he noted, is that “many of our early involvement techniques are focused on individuals, but the problems we’re talking about [nowadays] are collective problems. Simply aggregating the views of individuals is a misguided way to go about this…. We’re talking about important community problems; in many cases, global problems. So there are important issues of aggregation as well.”
At first, research efforts aimed at achieving collective awareness yielded very little informed participation in risk management, Gregory said, and “a lot of sham processes and cynicism on the part of the public.” The challenge for the risk management community in terms of boosting stakeholder engagement is how to develop approaches that incorporate social science concepts related to preferences, decision-making processes and other modes of thought.
“How do you do this, in the context of getting input from the public?” Gregory asked. “There is a lot of innovative work that is being done in risk management that is changing the scene — some really good work on [applying the social science concepts of] ‘mental models’ and ‘risk communication,’ and some very interesting work involving ‘deliberative polling’ with social media. Many of the methods