International organizations need to move from reactive, ‘defensive’ approaches to climate risk management to proactive, ‘offence-oriented’ approaches. Agencies will need to anticipate the effects of climate change and have a clear vision for their own roles in addressing climate risks.
Over the past decades the expansion of the responsibilities and operations of the UN has resulted in its affiliated organizations facing more, and more complex, challenges. We live in a new age of uncertainties that are giving rise to destabilizing risks at exactly the time when our collective will to tackle them together seems to be receding. COVID-19 has taught us that immense upheavals can be wrought by cascading, global risks.
Climate change is challenging the imperfect, bureaucratic structures created to cajole and guide collective policy action on numerous critical issues: how we combat extreme poverty, how we produce energy, how we prevent pandemic diseases, how we stop financial crises rippling around the world, how we manage flows of people moving from one country to another, and so on. Ultimately, climate change could inhibit the UN from fulfilling its core mission to maintain peace, rights and stability.
How international organizations manage climate risk will be critical to their ability to meet their objectives, deliver their mandates, improve their delivery of services, achieve value for money and prepare for external shocks. International organizations need to be agile: their responses cannot be limited to incremental, evolutionary risk management alone.
Organizations that have historically focused on short-term, project-level risks now need to change their governance models to take longer-term, systemic challenges into account.
International organizations need to be able to address uncertainty proactively. Genuine risk management should not be a bureaucratic procedure that happens independently of other institutional processes. Organizations that have historically focused on short-term, project-level risks now need to change their governance models to take longer-term, systemic challenges into account. International organizations are often reactive and cautious, but they need to move away from what could be termed a ‘defence-oriented’ mindset towards a more proactive, ‘offence-oriented’ approach. They need to anticipate how the climate is changing, what that means for their respective mandates and operations, and how they can be at the forefront of institutionalizing climate risk management. The Sendai Framework for Disaster Risk Reduction is working towards similar aims for preventing new and reducing existing disaster risks and could offer interesting lessons in this context.
On the positive side, international organizations are adopting increasingly professionalized risk management systems. While risk management in this context is not as mature as in the private sector, international organizations are starting to systematize the assessment and management of risks; to a certain extent, this includes climate risks that underlie and complicate other financial and institutional risks. However, more needs to be done. If a company fails to manage risk, it will go under, perhaps to be replaced by a start-up. This is not an option for international organizations responsible for helping to maintain peace and stability. They need to do even more to manage climate risk than the private sector (in some instances) does.
During the research and interviews conducted for this paper, the authors have considered the kinds of roles that international organizations should be expected to play in terms of improving climate risk management. We propose that they focus on functions in four categories:
- Mission resilience: Every international organization should be able to preserve its mission under a range of realistic global temperature scenarios. Each organization will need to choose the extent of this range based on its understanding of the best available science. Global warming of 3°C is proposed here as a reasonable central planning assumption, with 1.5°C and 4°C as the lower and upper limits respectively.
- Foresight and early warning: Each international organization should aim to be a resource of expertise in understanding the risks to its mission and communicating these both internally and to other parts of the international system. For UN agencies, this could include reporting back to the UN General Assembly or the UN Security Council. International organizations should know the threat to their mission better than anyone else.
- Support to nation states: International organizations should aim to act as thought/change leaders vis-à-vis national governments, to help the latter adapt and improve their own policies and governance. This has implications for internal management: if an international organization is not managing risks to its own core functions, it will not be able to support its member countries, particularly those most vulnerable to climate impacts.
- Learning and best practice: Learning and dissemination is a critical issue for climate change for several reasons: 1) the challenge of climate change is highly complex and systemic; 2) the world is running out of time to avoid worst-case scenarios; and 3) there is no single country, company or institution with all the answers. Beyond just understanding the risks of climate change to core mission resilience, international organizations have a critical role to play as learning hubs of best practice that will benefit other institutions.
Improving climate risk management will require international organizations to think about their risk management policies in three domains: building blocks (essential elements of effective risk management), routine processes (actions that should occur regularly), and periodic activities (actions that need to happen less frequently).
Building blocks
- Creating a positive risk management organizational culture: Member states need to demand risk management leadership from international organizations, and the latter’s leaders need to ‘set the tone at the top’ to invest in climate risk management. Within organizations, staff should be encouraged to identify and act on potential climate risks.
- Building risk management capacity: Risk management is the responsibility of every staff member across an organization, but specific staff should be given the responsibility of championing this function, to ensure coordination and quality control.
- Establishing boundaries and risk appetite: International organizations need policies that outline their expectations regarding the management of risks over the long term. They need to articulate their ‘climate risk tolerance’ when it comes to the strategic goals of the organization.
- Creating a common guidance framework: Elaborating a common set of guidelines for climate risk management would improve overall risk management, and could address some of the systemic aspects of addressing climate risk that may otherwise fall into different silos.
Routine processes
- Identifying climate risks: Risk managers should present the results of climate risk assessments in ways that are useful to decision-makers. Such assessments should make the full range of climate risks evident to people relying on services from the international community, especially the poor, women and those from marginalized groups.
- Involving stakeholders: Organizations should work with those who manage risks, as well as those working in areas of inherent risk, to develop analytical tools and recommendations for addressing risk. Such stakeholders often know the consequences of effective and ineffective risk management.
- Sharing information: Information needs to be ‘pushed’ out into the community as well as ‘pulled’ from it. Information needs to be made available to project managers dealing with risks, and must also be aggregated at the institutional level.
Periodic activities
- Reporting on climate risk: Given that climate change has systemic, cascading impacts, it is important that there is capacity within the international community to monitor how these risks are evolving at a systemic level. This should include a responsibility to help translate how climate risks interact with, and possibly multiply, other risks that international organizations face.
- Ensuring robust governance of climate risks: Member states should ensure that climate risk management is included, as appropriate, in the governance and oversight of international organizations. This could be supported by empowering a specialized agency, such as the UNFCCC, with the responsibility of monitoring risks across the system. Each year the relevant UN agencies, funds and programmes could disclose their exposure to climate risks: this would both provide a platform for better climate risk management and identify systemic fragilities linked to climate change.
- Sharing lessons: International organizations need to document their processes and procedures so that other organizations can learn from their successes and mistakes. Mechanisms such as the UN Strategic Planning Network, the OECD High Level Risk Forum and the Risk Management Task Force of the UN’s HCLM are vehicles for the sharing of information and for lessons on climate risk management.
- Supporting peer review and auditing: International organizations should be monitored at arm’s length by independent entities that can review their climate risk management processes and advise on improvements.
The growing impacts of climate change imply potentially profound constraints on international organizations’ ability to operate. Climate change is likely to shift, and most likely increase, the demand for the services of these organizations. Unless robust climate risk management processes are put in place, climate risks could undermine the effectiveness of agency programmes, impact staff safety and security, and hinder the ability of international organizations to fulfil their core purpose.
