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Conference Agenda

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Session Overview
TUE8.2: Public private partnership approaches
Time: Tuesday, 28/Aug/2012: 6:30pm - 7:15pm
Session Chair: Stephan SCHRECKENBERG, Swiss Reinsurance Company Ltd.
Session Chair: Haresh C. SHAH, Stanford University and Risk Management Solutions
Location: Flüela



Enhancing regional resilience to cope with critical infrastructure disruptions: the public-private partnership experience in Lombardy Region, Italy

Sara BOUCHON1, Carmelo DIMAURO1, Paolo TRUCCO2, Andrea ZACCONE3

1Risk Governance Solutions S.r.l., Italy, Republic of; 2Politecnico di Milano, Italy; 3Lombardy Region, Italy

Critical infrastructures (CIs) provide a number of fundamental services (transportation, energy, communication, etc.) on which society depends. The disruption or destruction of some of these infrastructures, triggered by natural, technological or intentional events, can be debilitating to the needs of society and individual citizens. To prevent potential crisis situation, due to the disruption of essential services, there is a need, not only to set up effective critical infrastructure protection (CIP) strategies, but also to enhance the resilience of society, i.e. its capability of detecting, facing, and recovering from any type of CIs disruption. While most CIP policies are developed at national level, the regional level appears particularly adapted to the implementation of strategies focusing on developing a holistic disaster resilience approach, based on governance principles.

First results of the PReSIC programme carried on in the Lombardy Region, Italy, illustrate a possible way to operationalize resilience at regional level, in order to address issues related to CIs disruptions. The objective of the programme is to enhance regional resilience by improving prevention, early detection and emergency management practices, leveraging on a PPP with CIs operators. The development of a collaborative environment between the regional civil protection authorities and the operators of transport and energy infrastructures resulted in enhanced information sharing among actors, as the precondition for improving the crisis management strategies of the Region. The Lombardy example shows the added value of a collaborative approach in fostering practical, stakeholder-driven and cross-sector processes that allows building trust among public and private partners and addressing in an efficient way the complexity of the potential consequences and cascading effects triggered by CIs disruption. The presentation will report the main results of the PReSIC programme and will focus on how the gained experience can contribute to the discussion on regional resilience related to critical infrastructures.

Old issues, new approaches - public private partnerships for effective recovery and reconstruction

Gavin John LOVE

WorleyParsons, United States of America

Media images and reporting portray recovery and reconstruction management to be chaotic, uncoordinated, inefficient and reactive. From the affected individual’s perspective, recovery and reconstruction can be seen to be a bureaucratic nightmare – no one knowing what is going on, or having to go to multiple support organizations for similar things. From the aid provider's and nation state's perspective, there can be a disconnect between the support required and the aid provided.

Most fail to appreciate that recovery and reconstruction operations are not quickly resolved; they can continue for years and change over time. The organizations developed to manage these events have to be adaptable and innovative; but more importantly they have to ensure that the longer term objectives are foremost in the planning and delivery activities. The recovery and reconstruction activities required to manage the multitude of issues, stakeholders, specialists, contractors and well intentioned individuals are the same as those for managing complex projects. But we do not manage it as a complex project. The question is why don't we?

A new platform for recovery and reconstruction management needs to be considered; a platform to that utilizes a private-public partnership to its best advantage. This platform recognizes that communities, business, and Government may no longer have sufficient resources and experience to deal with the complexity of recovery operations. Each may have expertise and knowledge in a specific area, however with the primary focus on response, there may be no longer sufficient “organizational knowledge” to structure, coordinate and manage the recovery, restoration and reconstruction activities.

By using an example case, the development and implementation of the public-private partnership will be outlined and discussed. The efficiencies and effectiveness of the partnerships and framework in addressing the long term needs and requirements of nation states, communities and individuals will be demonstrated.

Risk for financial agencies in providing affordable disaster insurance to developing countries

Saumyang M PATEL, Makarand PhD, PE, CCE HASTAK

Purdue University, United States of America

Under socio economic development practice in Hyogo Framework for Action (HFA) to make the world safer from natural hazards, emphasis is given to protecting and strengthening public infrastructure through proper design, retrofitting and re-building, in order to render them adequately resilient to hazards. Infrastructure facilities are not only important to fortify the nation against disaster risks but they are also crucial for nation’s economic development and poverty reduction. While their need is well known to decision makers, they are still short supplied and in poor condition mainly in developing countries. This has caused larger economic losses due to extreme events. This is a result of not only substandard infrastructure but also of increased population and low insurance penetration in the vulnerable urban areas. In order to hedge disaster risks to international capital markets, developing countries have adopted various approaches such as issuing catastrophe (CAT) bonds or creating a pool of funds that are supported by multi-lateral agencies such as the World Bank, Swiss Re, etc. These agencies are also providing risk transfer instruments for financial assistance in emergency situations. Due to restricted budget, most of the developing countries may ignore needs for proper disaster risk reduction and rather divert their funds for development projects. Thus there is a need for a mechanism that would make risk transfer instruments affordable for developing countries so that they do not have to compromise with their spending on development projects. This presentation would discuss the role that multilateral financial agencies could play in establishing such mechanisms through partnerships with governments. It would also discuss the change in their risk profile for financial agencies when they enter into such partnerships.

Can the PFI model mitigate risk in non-infrastructure procurement?


Consortium for the Built Environment, United Kingdom

In the current economic climate there is an increased requirement for governments, both national and local, to demonstrate value for money (VFM) to their stakeholders. Nowhere is this more important than in major infrastructure projects. For this reason, the UK Government has, for a number of years, used the Private Finance Initiative (PFI) methodology for such projects. However, the lessons learned from this procurement method may have applicability across procurement frameworks for other purchasing requirements.

In the UK, HM Treasury released Choosing the right Fabric, A Framework for Performance Information in 2001. This introduced the concepts of formalised performance framework for government by putting in place an outcome focused model. The basis for the framework can be seen in the Balanced Scorecard method, as introduced by Kaplan et al. The aim of this model was to provide a value for money / cost effectiveness output. However, it only defines cost effectiveness. HM Treasury defined value for money in 1997, so its exclusion from this model is surprising. The Treasury defines VfM as, 'not just (sic) about achieving the lowest initial price: it is defined as the optimum combination of whole life costs and quality'. In 2008, the model was updated by then Treasury MD and Head of Finance Profession, Dame Mary Keegan, to include two additional elements: risk and reporting.

This paper considers whether the introduction of risk would provide a more effective delivery of VFM for central governments in areas of procurement other than those currently procured using a PFI methodology. It considers whether this can be done across all government sector outcomes and contemplates the lessons of PFI in contributing to the discussion on the development of an evaluation framework for risk and value for money.

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