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Purpose

“It [follow-up and review] will mobilize support to overcome shared challenges and identify new and emerging issues.”

“They [follow-up and review] will maintain a longer-term orientation, identify achievements, challenges, gaps and critical success factors and support countries in making informed policy choices.”

The 2030 Agenda for Sustainable Development

Identifying risks and emerging issues, and adapting to them, will be a critical part of achieving The 2030 Agenda for Sustainable Development. Additionally, careful reflection of lessons learned during the implementation of The 2030 Agenda and making timely course corrections along the way, are integral to effective follow-up and review.

The purpose of this section is to provide basic guidance for assessing risk and fostering adaptability in the pursuit of The 2030 Agenda for Sustainable Development.

Guidance

The 2008 global economic crisis, the 2014 Ebola outbreak, and the 2015 Syrian refugee crisis served up stark reminders to the importance of understanding and addressing risk in development planning. Refugee and migration crises for example, represent not only increasing pressure on host countries and communities to adapt development targets and resources to the changing demographics, but also on countries of origin suffering from “brain drain” and the negative impact of conflict on the development process, in human, social, political, economic and ecological terms. Issues that emerge slowly over time can be just as crippling – the costs of adapting to climate change, for example, are upsetting the development trajectories of even the wealthiest of nations (IHDP 2013).

The path to achieving the SDGs by 2030 can ill afford to experience such crises along the way. Yet in reality, such risks are ever-present, and every effort must be taken to detect, manage, and ultimately avoid them. Fortunately a variety of approaches and tools have been created over the years for such purposes.

Member states can explore a range of approaches for assessing risk and fostering adaptability at the plan and policy level. Guidance for UNCTs in this regard is three-fold:

  1. Adaptive Governance: to provide a general framework for effectively navigating uncertainty, change and surprise across all of the guidance areas covered in this document (B1-B7);
  2. Risk analysis and management: for the systematic identification and management of the risks facing the implementation of national, sub-national and local plans; and
  3. Scenario planning and stress testing: to be applied regularly in the development planning and policy-making process for detecting emerging issues and examining the ability of plans, policies and programmes to perform under a range of plausible future conditions.

Adaptive Governance

“Recognizing that humanity is encroaching on critical planetary boundaries, new modes of adaptive governance are needed to initiate transition management and achieve internationally agreed goals and targets.” 5th Global Environment Outlook, UNEP

Acknowledging the inherently unpredictable nature of development, the 5th Global Environment Outlook report of the United Nations Environment Program stated that “it is nearly impossible to create a fail-proof blueprint or to formulate optimal policies. What is required instead is an inclusive, learn-by-doing process with careful monitoring of policy effects, and an ability to make critical choices and improvements consistent with the trajectories leading to established goals (UNEP 2012).”

The UNEP report further elaborated the core elements of adaptive governance (below) and each of these elements serves serve this Guidance Note either as additional rationale and context for guidance areas previously presented, or as new guidance that can be incorporated into the formulation of development strategies, plans and supporting policies and programs.

  • Multi-actor deliberation and agenda building. “Many stakeholders influence societal change. Governance must, therefore, be participatory to recognize advantageous leverage points, the levers for change and the correct direction to move them; to achieve coherent coalitions for creating shared notions of goals and ambitions; and to strengthen policy design and implementation.” This element is reflected in Section B2 of this Guidance Note and it also amplifies the importance of applying multi-stakeholder approaches in the process of adapting SDGs to national, sub-national and local contexts (Section B3).
  • Futures analysis and long-term collective goal setting. “Integrated and forward-looking assessments are critical tools that inform ongoing processes of change by systematically reflecting upon the future and developing shared notions of future goals and targets.” This element is covered directly later in this section on guidance for scenario planning and stress testing of plans and policies.
  • Enabling self-organization and networking. “Creating opportunities for cooperation and replicating successes, ensuring that social capital remains intact, and guaranteeing that members of the population are free and able to interact, are all fundamental elements of building the capacity of actors and policy itself to plan for and adapt to surprises.”

This element is perhaps the least intuitive of the adaptive governance elements, but it is critical for scaling up the impact of policies and plans. It speaks to the important role that social capital plays in helping stakeholders adapt to unanticipated shocks (i.e., natural disasters, pandemics, economic crises) and even slower, more subtle change (i.e., climate change adaptation). This social capital comes in many forms such as through informal networks, faith-based groups, and professional associations and grass-roots civil society organizations in helping stakeholders respond to unanticipated events. Additional guidance for enabling self-organization is provided in the Toolkit section (Swanson and Bhadwal 2009).

  • Variation, experimentation and innovation. “Diversity of responses [i.e., policies and programs] forms a common risk-management approach, and continuous reflection and improvement helps to develop a context in which innovation for desired change can thrive.”

This element provides guidance for the selection of policies and programmes in support of development strategies and plans (see Section B3 in relation to the formulation of strategies and plans using systems thinking).

  • Reflexivity and adaptation. Systemic [i.e., formalized] review of past, present and future sustainability conditions and policy performance through interaction and cooperation with a range of stakeholders is critical for continuous improvement and social learning.

This element of adaptive govern amplifies the important function that follow-up and review plays in The 2030 Agenda and within that, the importance of applying multi-stakeholder approaches in the design, implementation, review and improvement of policies and programs. Many stakeholders have developed platform for knowledge and experience sharing in implementing monitoring and evaluation of development policy and programmes. These systems could be better disseminated and tailored to fit SDG purposes.

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Innovative Case Examples: Kyrgyzstan

Following the 2010 inter-ethnic violence in the south of Kyrgyzstan, it was recognised that a multi-sector approach was needed to help build bridges between communities involved in the ethnic conflict, and to support sustainable peace. In a 6-month inception phase, a number of reports, surveys and assessments were conducted to understand the context and needs of vulnerable children, women and their families. The resulting programme design addresses inequitable access to basic services and lack of opportunity, which was identified as a driver of conflict.

The long inception phase allowed interventions to be tailored to specifics of municipal contexts. The preparatory work, and the engagement with stakeholders at the assessment and design stage, allowed UNICEF to achieve more than it had originally planned in less time than anticipated.

India

A Risk Informed Development Planning System (RIDPS) was developed by UNICEF in India as a system that aim at producing real-time data for risks and vulnerabilities using climate and other hazard indicators and child risk indicators. It is designed to: support risk informed development planning; analyse multiple sectors in one tool at the same time; and identify data collection gaps and enhance data collection and analysis skills. The tool allows users to access, analyse, visualize and export data to meet risk informed analysis, planning and reporting needs, quickly and easily. It allows users and sector specialists to select, aggregate, disaggregate and cross-analyse multiple indicators into composite indexes; and supports the identification of correlations and composite levels of vulnerability across sectors, contributing to risk informed development programming.

The system has been developed initially for use in Bihar and Rajasthan States, with indicators relating to WASH, education, health and nutrition sectors together with demographic and economic indicators which are child focused, and which have been selected because government data exists already or, where there is no government data, it is needed to make informed decisions. The picture of disaster proneness produced is constantly updated in the light of real time data, meaning that the State Governments have a current overview on levels of vulnerability. The system includes previously uncollected data collected via SMS from front line workers in remote areas (e.g. government health workers) so that vulnerabilities from these remote areas inform regional government planning.

From 2014, RIDPS data has informed state planning. The RIDPS has wide potential applicability in multiple risk settings.

Source: UNICEF.

Risk Analysis and Management

Risk analysis involves the identification and study of uncertainties that can impact negatively on performance. It is a practice that governments can use not just in the early stages of formulation development plans, but as a regular and formalized process for ongoing improvement. The annual Global Risk Report of the World Economic Forum is a good example of the type of information and exercise that countries can pursue at national, sub-national and local levels to help navigate the complex and dynamic terrain of the 21st century (see Innovative Case Example below).

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Innovative Case Example: 2015 Global Risk Report – World Economic Forum

For a decade now the World Economic Forum in its Global Risk Report has been “highlighting the most significant long-term risks worldwide, drawing on the perspectives of experts and global decision-makers” and in the context of economic, environmental, societal, geopolitical and technological issues. The 2015 report warns that the world is “insufficiently prepared for an increasingly complex risk environment”, stressed by renewed concerns of inter-state conflict, the emergence of cyber-attacks, failure of climate change adaptation, and strained public finances and rising unemployment in the wake of the 2008 economic crisis.

Source: WEF Global Risk Report (2015)

Risk management is a process that includes the identification, assessment and prioritization of risk, combined with the allocation of resources to minimize, monitor and control risk (Douglas 2009; see also ISO 2009). Enterprise Risk Management (ERM) is the more formal terminology, and while it grew out of the private sector, many government audit departments, at all levels, undertake some form of risk management at the programme and project level.  It is a process that can be incorporated as part of follow-up and review (see Section B7).

The International Standards Organization (ISO) has established ISO 31000 on risk management principles and guidelines. The basic steps of risk management as outlined in ISO 31000 are depicted below and elaborated as follows: “All activities of an organization involve risk. Organizations manage risk by identifying it, analysing it and then evaluating whether the risk should be modified by risk treatment in order to satisfy their risk criteria. Throughout this process, they communicate and consult with stakeholders and monitor and review the risk and the controls that are modifying the risk in order to ensure that no further risk treatment is required (ISO 31000 – 2009).”  

These guidelines can be applied within any type of public or private organization. In regards to application by governments to manage risks associated with achieving their development plans and nationally-adapted SDGs, this scope is set within the first step on ‘Establishing the Context’. This includes both the internal context–the “internal environment in which the organization seeks to achieve its objectives (ISD 31000-2009)” and the external context–“the cultural, social, political, legal, regulatory, financial, technological, economic, natural and competitive environment, whether international, national, regional or local; key drivers and trends having impact on the objectives of the organization; and relationships with, and perceptions and values of external stakeholders (ISO 3100-2009).”

ISO 31000 on Risk Management

Furthermore, the ISO 31000 notes the following in relation to the application of risk management in organizations: “Although the practice of risk management has been developed over time and within many sectors in order to meet diverse needs, the adoption of consistent processes within a comprehensive framework can help to ensure that risk is managed effectively, efficiently and coherently across an organization. The generic approach described in this International Standard provides the principles and guidelines for managing any form of risk in a systematic, transparent and credible manner and within any scope and context (ISO 31000 – 2009).”

Disaster risk management is one area that has seen the creation formal risk assessment and management institutions and processes, although not necessarily according to the ISO standards. See the innovative case example below featuring the Ecuadorian Secretariat for Risk Management.

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Innovative Case Example: Ecuadorian Secretariat for Risk Management

The Ecuadorian Secretariat for Risk Management[1] is the Governmental institution that is concerned with risk reduction and emergency and disaster management. Its mission is to ensure the protection of people and communities from the adverse effects of natural or man-made disasters, through the generation of policies, strategies and standards that promote the identification, analysis, prevention and mitigation of risks, emergency situations and disasters.

In Ecuador three volcanos are experiencing eruption processes and the El Niño is approaching strong category strength. Today the UN system is supporting the National Risk Management Secretariat and other public entities in developing scenario planning and potential damage estimations and costing of potential natural disasters (UNDG and UNDP 2015).

Source: UN Office for Outer Space Affairs (2015).

Tools have also been developed for broader risk assessment and management. One example is the INFORM risk analysis model.

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Innovative Case Example: INFORM – Index for Risk Management

INFORM is an open-source index for risk management. It is “the first global, objective and transparent tool for understanding the risk of humanitarian crises.” It was developed by the UN Inter-agency Standing Committee Task Team for Preparedness and Resilience and the European Commission.

INFORM uses 50 indicators to better understand exposure, hazards, vulnerability and coping capacity in a given country. Data and country profiles are available for 191 countries, showing trends, comparisons with countries having similar risk, regional and income-group averages and more information at the indicator level.

INFORM can also be used at the sub-national level to show how crisis and disaster risk varies across a country or region. Current sub-national applications include Sahel, the Greater Horn of Africa, Lebanon and Colombia.

Source: INFORM (2015).

Scenario Planning and Stress Testing

Scenario planning is a participatory approach designed to create “frameworks for structuring executives’ perceptions about alternative future environments in which their decisions might play out (Ralston & Wilson, 2006).” It is commonly applied in environmental planning and management, and more recently, for stress testing strategies and policies in the financial sector. As such, this Guidance Note recommends the application of scenario planning in the formulation of development strategies and plans as a means for detecting and addressing emerging issues and identifying a variety of policies and programmes that are robust across a range of plausible futures.

The general steps of scenario planning can be parsed into the general phases of foresight to insight to action (Institute for the Future 2013). There will be differences in the implementation of scenario planning depending on the purpose of the exercise (IISD 2014): “the steps will vary somewhat if the exercise is meant to illuminate vulnerabilities of an existing strategy or plan (stress testing), versus if the exercise is meant to explore plausible futures that might unfold to provide context for policy recommendations (scenario analysis), or to develop a vision of the future and back-cast a plan for getting there (visioning). In practice, there is often a little of each of purpose imbedded in any exercise.”

The UN Environment Program’s Inquiry into the Design of a Sustainable Financial System highlights the importance of scenarios in their recommendation to governments to undertake stress testing across financial sectors and markets (UNEP 2015). Specifically, they recommend to “develop scenario based tools to enable a better understanding of the impacts of future climate shocks on assets, institutions and systems.” Additionally, in 2015 the European Financial Review recommended that “Leaders need to anticipate major market shifts, looming crises, and changes in regulation or disruptive offerings by rivals. War gaming, systems thinking, and scenario planning are some of the tools that can help accomplish this urgent need.”

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Innovative Case Example: Environment Outlook for Latin America and the Caribbean

The Division of Early Warning and Assessment of the UN Environment Programme undertakes regular scenario analysis via their Global Environment Outlook (GEO). The GEO process also works with national governments to undertake regional outlooks to help inform policy development.

The 2010 Environment Outlook for Latin America and the Caribbean (LAC) considered the socio-economic and environmental implications of four plausible future scenarios, namely: (i) relegated sustainability; (ii) sustainability reforms; (iii) unsustainability and increased conflicts; and (iv) transition to sustainability.

In applying scenario analysis the LAC outlook report provided the following guidance:

“The scenarios must be prepared with the necessary detail when making the basic characterization of the object under study at different spatial and temporal scales; they must be plausible, coherent and reflect – as far as possible – how the disciplines of the natural, social and other sciences are integrated. They have a qualitative component, where experts in different branches of learning explain what they know about the driving forces, their potentialities and inter-relationships; and a quantitative component fundamentally based on the results of statistical models and that, as a guiding element, takes into account the basic assumptions defined in the qualitative analysis.”

Source: UNEP (2010).

Toolkit

Scenario Planning

  • Scenario Planning Handbook (Ralston and Wilson 2006)

Risk Analysis and Management

  • ISO 31000 – Risk management (ISO 2009)
  • A Structured approach to Enterprise Risk Management and the Requirements of ISO 31000 (AIRMIC, ALARM, and IRM 2015).
  • INFORM index for risk management (INFORM 2015).

Adaptive Governance and Policy-making

  • Creating Adaptive Policies: A Guide for Policy-making in an Uncertain World (Swanson and Bhadwal 2009)
  • ADAPTool – the Adaptive Design and Assessment Policy Tool (IISD 2015)

AIRMIC, ALARM, and IRM (2015). A Structured approach to Enterprise Risk Management and the Requirements of ISO 31000. The UK  Association of Insurance and Risk Managers (AIRMIC), the public sector risk management association (Alarm) and the Institute of Risk Management (IRM). 

Hubbard, Douglas (2009). The Failure of Risk Management: Why It’s Broken and How to Fix It. John Wiley & Sons. p. 46.

IHDP (2013). Land, Water and People: From Cascading Effects to Integrated Drought and Flood Responses. International Human Dimensions Programme on Global Environmental Change. Summary for Decision-makers. UNU-IHDP: Bonn.  Available at: 

IISD (2014). GovernAbilities: The nexus of sustainability, accountability and adaptability – Essential tools for successful governance in the 21st century. International Institute for Sustainable Development (IISD): Winnipeg. 

IISD (2015). Applications of the Adaptive Design and Assessment Policy Tool (ADAPTool). International Institute for Sustainable Development.

INFORM (2015). Index for Risk Management. Inter-agency Standing Committee Task Team for Preparedness and Resilience and the European Commission.

ISO (2009). ISO 31000 – Risk management. International Standards Organization. 

Ralston, B. & Wilson, I. (2006). The scenario planning handbook: Developing strategies in uncertain times. United States: Thompson-Southwestern.

Shift (2013). Long-term scenarios for a Swedish green economy. 

Stockholm Environment Institute. (2013). Scenarios for a Swedish green economy: Commentary.

Swanson, D. and S. Bhadwal (2009). Creating Adaptive Policies: A Guide for Policy-making in an Uncertain World. Sage: New Delhi / IDRC: Ottawa.

UNDG and UNDP (2015). Retreat report on early Country Experiences in Mainstreaming, Acceleration and Policy Support (MAPS) for the 2030 Agenda. United Nations Development Program., New York, 1-3 December 2015.

UNEP (2010). Latin America and the Caribbean: The Environment Outlook. United Nations Environment Program. 

UNEP (2012). Chapter 16: Scenarios and Sustainability Transformations. In Global Environment Outlook 5. United Nations Environment Programme. Available at 

UNEP (2015). The Coming Financial Climate: The Inquiry’s Fourth Progress Report. United Nations Environment Program.

UN Office for Outer Space Affairs (2015). Knowledge Portal: Space-based Information for Disaster Management and Emergency Response.

[1] See http://www.gestionderiesgos.gob.ec/

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