A participant asked:
What are the best references available to monetized risk from a triple bottom line approach and specifically thinking about the consequences of failure?
And we should remind folks what the triple bottom line is because maybe not everybody is familiar with that.
But when you’re thinking about consequences, you are often thinking about financial consequences, social consequences, and environmental consequences.
So, when they talk about the triple bottom line, they are thinking of those three bits.
Some are easy to think about in money terms, like the financial, how much does it cost me to repair? Or how much do I get sued from a customer because I damaged their property?
Others are a lot harder to monetize, like what’s the damage to the environment costing me?
So, if a fish dies because I discharged chlorinated water into the stream, what is the monetary cost of that? Or if somebody got sick, what is the financial cost associated with that?
So sometimes, I think this person is asking the questions kind of getting at how do you evaluate things that are financial and things that are not when you are thinking about this triple bottom line issues?
That’s an excellent question. And just interestingly enough, in New Zealand, we had had a long, running reconciliation process going underway with the original native indigenous population we’ve got.
We have a quadruple bottom line because we have cultural considerations as well, and we’re still working it out. It’s a feel-your-way-in-the-dark type of a process in terms of getting ahead on some of those questions.
The other thing quite apart from “how do you put a dollar value against things” is sometimes you can’t. Maybe you can put a risk value against them, but it’s also the relative weighting.
So, if we were to go back, let’s say 40 years, it was around how much would it cost? And maybe some of the social stuff. Nobody was thinking too hard about environmental impacts.
Now you would go, we’re all a lot more aware of environmental impacts. Maybe we want to give that a lot higher weighting. And that is where there is no right answer.
You need to, and if you add a cultural mix and if you are in a place where these cultural considerations need to be undertaken as well, how much weighting?
Does the cultural consideration override all the other ones? And that’s the discussion that has to be heard.
And that’s not a five-minute discussion. That’s a community discussion that rolls around, sometimes for upwards of a decade or more. At some space, a community, country, or state will settle. This is where we’ve landed for now.
And then you can go, right, we’re going to give this much weight to environmental issues. We’re going to give this much weight for social or cultural.
I mean, these are societal questions. It’s a very political question, and right across the world, these sorts of things are addressed at political levels as well, and I think asset management and utility management is part of that space.
So, it’s something you have to deal with, and it is something that is settled in phases but can change.
Whatever place the community is at that point, in terms of what the weighting is, that will drive policies in that period.