Managing risks in development interventions

Inclusive Economy10 Jul 2013Albert Soer

At UNDP we have long experience of working in development but we have never before been in a situation where developments are occurring so fast and can be so disruptive. 

Take the Arab Spring, for example. Frankly, it caught us somewhat off-guard and we decided that we may need different approaches to our thinking on development and more specifically to our way of working to address development challenges. So we embarked on an ‘innovation track’. We are documenting what we are doing and learning on our ’Voices of Eurasia’ blog site.

What we are looking for are ways and means to better understand development reality. In the past, we would analyze a problem, discuss it with selected stakeholders, propose a strategy to the government and establish a project to help implement the strategy. But this led to numerous difficulties.

It is often so time-consuming that, by the time we are ready to start implementing a plan, reality has moved on and the plan has become irrelevant. Or to put it another way, we assumed the environments in which we work are stable and predictable, while in fact they are evolving dynamically and are a lot less predictable than we thought. So we need to find much faster ways to understand the environment and to find out whether possible solutions actually work, scrap those that don’t and scale up those that do.

With a wide (and sometimes unknown) variety of stakeholders, we need to look more closely at what people actually expect government to do, what they think is realistic to change, and what their priorities are. That means we are looking at more open systems of governance, with more flexible mechanisms for collaboration between diverse stakeholders, and how government action ‘fits’ with the actions of other stakeholders.

In a situation where we accept that we do not fully understand how our environment functions and how our actions contribute to development results, and where dynamic change permanently offers new threats and new opportunities, we are talking about the core of risk management. I believe that integrating risk management into the overall approach to change management is vital.

The overall concept is clear: identify threats that may hamper efforts to achieve desired results and opportunities that may strengthen those efforts in time to be able to act, integrate this approach into the regular management structure and in principle it should work.

However, it is not that simple… We are looking at three aspects we believe are particularly challenging:

  • Moving from a stable and predictable environment to a dynamic environment with many (known and unknown) parties and stakes requires ongoing ‘environment scanning’, allowing identification of stakeholders and system processes and – especially – early identification of changes. However, scanning the environment for change is not as obvious as it sounds. We are experimenting with several options, like Big Data analysis, micro-narratives and real time monitoring.
  • The emergence of new threats and opportunities requires flexibility in result-chain management and activity implementation. However, risk and opportunity management often requires a change of organizational culture, from purely looking at threats to also identifying opportunities. Moreover, it means that planning becomes more indicative as opportunities may arise to achieve the desired results more quickly, more cheaply or better than originally planned. This has consequences for, for example, procurement arrangements, budgeting and accountability issues.
  • We are now more aware that the public administration is working in an environment with multiple partners at the same time. To be productively engaged, this requires ‘collaborative arrangements’, where the public sector, civil society and the private sector can engage in problem identification, solution design and action development to address the development challenges society is facing. While collaborating with known parties may be difficult, we have ample experience of doing this. But how do you collaborate with parties that you don’t know? How do you ‘collaborate’ with unorganized groups? And how do you identify those parties?

We are addressing these issues in our innovation track. We hope to have more specific answers on what works when and how in the near future. You can follow us on our Voices of Eurasia blog site.

This post is part of the ‘risk management for development’ blog, managed jointly by The Broker and the Nederlands adviesbureau risicomanagement. Read Magda Stepanyan’s introduction to the blog ‘Risks we take and choices we make’.