Risk assessment, Social License to Operate and Corporate Social Responsibility

At Riskope we champion the idea that Risk assessment, Social License to Operate (SLO) and Corporate Social Responsibility (CSR) are strongly intertwined. It is part of our silo-breaking philosophy. Riskope’s builds risk assessments considering multidimensional consequences. These include “people” consequences, such as loss of quality of life. At the end of the day SLO and CSR are supported by enhanced transparency, clearer vision and distance themselves from a mere PR act, as people will identify more with the prospective realities.

Corporate social responsibility, risk management and development in the mining industry

We recently read a very interesting paper on Corporate social responsibility, risk management and development in the mining industry.

The paper states that CSR approaches have inherent limitations. This include, after re-wording to comply with a consistent risk technical glossary:

• treating CSR as PR,
• focusing on the system’s elements that generate the largest risks rather than on those (people) with the greatest need,
• excessively simplifying complex processes and
• focusing on maintaining the status quo.

These limitations hinder proper consideration for those living nearby a mining operations even if CSR activities are a corporate priority.

Risk assessment, Social License to Operate and Corporate Social Responsibility

This second section’s title is very similar to the prior one, but hides a “conceptual revolution”.

A modern risk assessment should deliver corporate management data necessary to support CSR and foster SLO and not vice-versa. Thus the chance of the CSR to be a PR exercise will be significantly reduced. Also the risk assessment will guide the mitigative actions towards protecting both operations and people.

Going back in time, in 2013 (Oboni, F., Oboni, C., Zabolotniuk, S., Can We Stop Misrepresenting Reality to the Public?, CIM 2013, Toronto ) we stated that: “Especially for very large projects, risk assessments generally consider too simplistic consequences and ignore “indirect/life-changing” effects on population and other social aspects that can be grasped in ORE using simplified method and considering the wide uncertainties that surrounds the driving parameters. Among these:

• human H&S (health and safety),
• fish, fauna and top-soil/vegetation consequences,
• long term economic and development consequences, and social impacts.

Similarly other recommended consequence models should include:

• Extent of damage as expressed in casualties, wounded, business interruption etc. possibly merged into one metric, with the inevitable uncertainties,
• Geographic dispersion of damage
• Duration of the damage
• Reversibility of the damage (or perpetual loss?)
• Latency between an accident and the occurrence of its damages
• Social impacts (inequity/injustice, psychological stress and discomfort, conflicts and mobilization, pillover effects).

Other examples

Then, in a white paper we identified again the need for holistic consequence functions. These consider various types of consequences and their combination. For example, if we consider the Mont Blanc highway tunnel accident, consequences were tragic and complex:

• 39 casualties,
• structural damages to the tunnel itself,
• legal costs and liabilities, and
• a very long and costly business interruption which congested traffic in an area spanning a radius of over 300km in central Europe.

Finally we wrote a paper in 2014 (Oboni,C, Oboni. F, Aspects of Risk Tolerability, Manageable vs. Unmanageable Risks in Relation to Governance and Effective Leadership, International Symposium on Business and Management, Nagoya, Aichi-ken, Japan, April 2014 ) which highlighted that: “A recent decision bearing on a highly debated “perpetuity” environmental rehabilitation required by very large toxic material dumps in Canada (Reviewboard, 2012) defined what a modern risk assessment should include, based on public hearings results. Based on the above it becomes clear that including partial components of the consequences such as:

• Biological Impacts and Land Use,
• Regulatory Impacts and Censure,
• Public Concern and Image,
• Health and Safety,
• Direct and Indirect Costs,

is a better way which brings credibility and adds transparency to a risk assessment, i.e. a way to reduce public distrust toward risk assessments.”

Tagged with: Consequences, Corporate Social Responsibility, CSR, social license to operate

Category: Consequences, Optimum Risk Estimates, Risk analysis, Risk management