GCRI · Fields across the Consortium
Governance and institutions
Governance of systemic risk is the problem of assigning responsibility for risks that no single institution owns, and of deciding with incomplete evidence without either paralysis or overreach.
01Contents
Governance and institutions in six parts.
02Three mandates
The field, seen three ways.
03Simulator
Stocks, flows, delays and a tipping threshold.
Two stocks, pressure and adaptive capacity, joined by a reinforcing growth loop, a delayed balancing response and damage when pressure outruns capacity; past the threshold the system can tip. Teaching model with stated illustrative values, not a prediction.
Controls
- Growth of pressure
- 6.0% a year
- Efficacy of capacity in reducing pressure
- 4.0% a year
- Investment response to perceived pressure
- 20%
- Perception delay
- 4.0 years
- Tipping threshold of pressure
- 60 index
- Amplification past the threshold
- 2.0 times
- Years simulated
- 50 years
Readouts
- Peak pressure
- 113 index
- Capacity at the end
- 186 index
- Years over the threshold
- 15.8 years
Numbers, methods and sources
| Year | Pressure | Capacity | Perceived |
|---|---|---|---|
| 0 | 20.0 | 50.0 | 20.0 |
| 4 | 23.3 | 44.9 | 21.2 |
| 8 | 27.2 | 42.2 | 24.0 |
| 12 | 31.7 | 42.3 | 27.7 |
| 16 | 36.8 | 45.5 | 32.2 |
| 20 | 42.3 | 51.5 | 37.2 |
| 24 | 47.9 | 60.3 | 42.6 |
| 28 | 53.2 | 71.3 | 48.0 |
| 32 | 57.8 | 84.3 | 53.1 |
| 36 | 66.4 | 98.4 | 58.4 |
| 40 | 82.7 | 115.9 | 69.7 |
| 44 | 97.8 | 139.7 | 83.8 |
| 48 | 109.1 | 169.4 | 97.3 |
Methods
- System dynamics Forrester (1961), Industrial Dynamics, MIT Press; Sterman (2000), Business Dynamics
- Critical transitions and tipping points Scheffer and others (2009), Early-warning signals for critical transitions, Nature 461
- Causal loop diagram Sterman (2000), Business Dynamics, McGraw-Hill
- Uncertainty fan (parameter Monte Carlo) Spiegelhalter, Pearson and Short (2011), Visualising uncertainty about the future, Science 333
- One-at-a-time sensitivity (tornado) Saltelli and others (2008), Global Sensitivity Analysis: The Primer, Wiley
Data
No observed data enters this model: it runs on the teaching values set by the controls, to be replaced with a programme’s own evidence.
Across the six pillars, led by Nexus Consortium
- Experiments Labs at GCRI: Labs
- Built in Foundry at GCRI: Foundry
- Tested at Universe at GCRI: Universe technical office
- Codified in Nexus Standards
- Published in Reports at GCRI: Publish
- Taught in Risk Academy
04The systemic question
Ownerless risks and coordination.
The IRGC risk governance framework distinguishes simple, complex, uncertain and ambiguous risks and matches each with a style of governance: routine regulation, expert deliberation, precaution, or broad stakeholder discourse. Systemic risks tend to be all four at once, which is why mandates, coordination bodies and records of who decided what matter.
- Mandate mapping: which authority can act on which part of a risk.
- Coordination mechanisms across ministries and levels of government.
- Accountability records that survive staff and government turnover.
05Process
How the process runs.
Process
Governance and institutions: Risk management process
ISO 31000:2018 sets out an iterative risk management process, from scope, context and criteria through assessment and treatment to monitoring, review and reporting.
01 Frame
- 01Scope, context and criteriaDataset · National DeskThe frame for the process: the scope, the external and internal context, and the risk criteria. Later steps are read against this frame.
02 Risk assessment
- 04Risk identificationStep · National DeskThe first part of risk assessment. Risk is usually expressed by risk sources, potential events, their consequences and likelihood.
- 05Risk analysisModel · National DeskThe second part of risk assessment. It considers consequences and likelihood of the identified risks, with guidelines, not a formula.
- 06Risk evaluationStep · National DeskThe last part of risk assessment. Results of the analysis are compared with the risk criteria to see where more action is needed.
03 Treatment
- 07Risk treatmentStep · National DeskTreatment options are selected, then plans are prepared and implemented. Residual risk is documented and goes to monitoring and review.
04 Across the process
- 02Communication and consultationStep · National DeskCommunication and consultation with stakeholders is its own process element. The standard draws it alongside the others, not in sequence.
- 03Monitoring and reviewStep · National DeskMonitoring and review take place at every stage. New experience, knowledge and analysis can revise elements, actions and controls.
05 Record and report
- 08Recording and reportingRecord · National DeskThe process and its outcomes are documented and reported. The standard does not name who receives the report in the clauses read.
Outline of an external standard or method, from its public sources. It describes what the framework says, not a record of any run. It does not show that Nexus or any partner performs, certifies or approves a step. A gate is a step of the method, never a Nexus approval.
06Frameworks
Governance references.
| Framework or body | What it governs or supplies |
|---|---|
| OECD Recommendation on the Governance of Critical Risks | Whole-of-government risk governance |
| IRGC risk governance framework | Pre-assessment, appraisal, characterisation, management and communication |
| Sendai Framework priority two | Strengthening disaster risk governance |
08Grounding
The methods behind the field.
- Data engineering, interoperability and stewardship
- Digital identity and public digital systems
- Cybersecurity and cryptography
- Systems engineering
- Decision analysis under uncertainty
- Policy, institutional and decision science
- Probability and statistics
- Causal inference and impact evaluation
- Game theory and mechanism design
- Financial economics and macro-finance
- Artificial intelligence and machine learning
- Network science and contagion
- Distributed ledgers and digital assets
09Sources
Where this page’s references lead.
The bodies and documents this page is read against. Status and editions change; each link goes to the issuing body.
10Questions
Questions and answers.
Why does GCRI host field gateways?
GCRI hosts the shared references of the Consortium, including the STEM Commons and the field gateways, so each field has one place that links all three institutions’ work.
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