Local government proactive on risk management

Local Government New Zealand (LGNZ) has kicked off two major pieces of work looking at risk management initiatives within local and regional New Zealand.

Natural Hazards Management

Led by its Regional sector, late last year LGNZ formed a cross-sector Natural Hazards Steering Group to consider questions around natural hazards knowledge gaps. The group is completing its consultation with the local government sector and will shortly release a discussion paper Managing Natural Hazards in New Zealand: Towards More Resilient Communities for wider review. The paper is designed to stimulate discussion about natural hazard management and the impact on communities and councils given a range of long-term risks, opportunities and changes.

Examples cited in the paper are extreme weather events driven by climate change which contribute to rising sea levels, reduced crops, droughts and increased risk of floods and storms.

LGNZ has identified the importance of local and central government working closely to look at solutions for natural hazards and is advocating for greater partnership with central government and an elevation of natural hazards in the Resource Management Act to recognise the likely impacts of climate change.

While Government has stated that its preference for generalised guidelines, LGNZ President Lawrence Yule says that without a clear framework it is difficult for councils with limited individual resources to do what might be the right thing for the future.

“Natural hazard management has particular complexities. There are major knowledge gaps between what we need to know and what we actually know to enable sound planning and good decisions. There are also more than the normal alignment gaps due to the multitude of parties involved from both the private and public sectors and multiple individuals, communities and organisations,” Mr Yule says.

“There are substantial questions that local government needs to consider about our collective organisational and operational effectiveness around natural hazards. We see a need for central government to be involved in this conversation in order to form a nationwide framework and tools.”

LGNZ’s Natural Hazards Steering Group includes representatives from the Department of Prime Minister and Cabinet’s Security and Risk Group, Earthquake Commission, GNS, Environment Canterbury, IAG, Taranaki Regional Council, Christchurch City Council, Capacity Infrastructure Services (Wellington), Auckland Council, Hawkes Bay Regional Council and Tasman District Council.

Local Government Insurance Review

Following on from work the sector has done on natural hazards, LGNZ has commenced work on its Insurance Review.

The review recognises the significant impacts the Christchurch earthquakes have had on the insurance market. It recognises the price and extent of insurance provision for local authorities has changed, creating extra costs. This has forced a deeper examination of risk profiles, risk assessment practices and risk mitigation techniques in New Zealand local authorities.

Work carried out to date recommends that councils more actively embrace, understand and manage assets and risk including spending more resources on risk profiling, risk management and risk mitigation to improve self-reliance and resilience.

“The review’s work to date makes it very clear that the bigger issues for local authorities is access to skills and expertise to consider and manage risk, not just the purchase of insurance which tends to be the main risk mitigation option,” Mr Yule says.

“Councils need to more actively embrace risk management, including the selection of funding techniques and insurance condition tradeoffs such as premiums, deductibles and exclusions. The sector needs to think smarter about self-reliant, sustainable, resilient solutions including the most efficient pathway from local authority to global reinsurer support.”

“Some councils are already moving well down this path and this Review will allow others in the sector the opportunity to review the strategic options ahead of us,” Mr Yule says.

LGNZ has created a working party to review options around risk management and insurance, with members pulled from across New Zealand:
Porirua City Council General Manager and Chief Financial Officer, Roy Baker
Environment Canterbury Commissioner and Chair of the Council’s Performance, Audit and Risk Committee, David Bedford
Hamilton City Council General Performance Manager, Blair Bowcott
Far North District Mayor, the Hon John Carter
Manawatu District Council Deputy Mayor, Tony Jensen
Dunedin City Council Chief Financial Officer, Grant McKenzie
Waimakariri District Chief Executive and Riskpool Chair, Jim Palmer
Tauranga City Council Project Finance Manager, Frazer Smith
Greater Wellington Regional Council Acting Chief Financial Officer and Treasurer, Mike Timmer
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