 Roedd y pethau o'r ffordd yn ymddangos i'n hoffodd, mae'n ffordd yn rhan i'r ffordd i'r ffordd ar y pobl a'i bwysig ar gyfer y ddigonnydd. Mae'r hoffodd yn rhan i'r ffordd yn y hoffodd, mae'n rhan i'r hoffodd yn rhan i'r hoffodd i'r hoffodd ar y cwmno gyda'r webesaid. Rwyf wedi cael gwlad am fydd yn cael dweud mynd i gynnwys i ddim yn y rhan fyddwys yn unrhyw gynnaeth a brydiechais arall, yn dda i'r gynllun, ond mae'n gweithio'r gynllun. Wrth痴 gyd wedi bod i'r gael yn arweinydd â'n ddiddor platforms ac arweinydd o'r economys, yr sydd wedi cyrnydro o'r polites mewn sydd ar y mynd i gyd yn gallu ei wneud o'r ddeuneddau a gwirioneddau a'r angenfyn neu'r angenfyn yn ei fod yn oed yn ysgolol, i'w ddaeth i'r unrhyw i'r angenfyn yn ddefnyddio i'r angenfynol, School of Business and Management, a'r angenfyn neu'r angenfyn yn ysgolol i'ch gydigol i'r angenfyn yn ymgyrchol, ond mae'n rhan o'n meddwl o'r angenfyn yn ysgolol. Wnaeth i'n fydd yn fwyaf i'r angenfyn o canes, rwy'n rhan o'i angenfyn ysgolol, This is actually mostly known for other work. Understanding that he regarded risk and uncertainty as very important. Then say something about the 2007–08 global credit crunch of the roll. The risk played in that. Something about environmentalism, I think in order to face up to the challenges of climate change. mae'n ddysgu'r rysg ymweld yn gallu'n gwybod, dwi'n ddysgu'r rysg yng nghymru. Ond mae'n rhaid i'w ddangos i ddiweddol sy'n ddod i'n ddysgu'r rysg mewn bywydol i'r ddysgu'r hyd yn ymgyrchol. Ond nid o'r gwybod a'u ddechrau i bod ymgyrch yn dangos gyflym ar gyfer y dyfodol o'r wneud o'r rysg a go on to talk about lessons and policy implications. I said that Cate has better known for other things and actually he's made a bit of a comeback. He was regarded as the main economist for them when I was studying it in the 1970s. Obviously he fell out of fashion with the rise of monetisation throughout the 80s and 90s. He's made a bit of a comeback with the credit crutch and actually 2009 was the first global recession in the sense that the national income actually fell rather than rose. The first global recession since the days that Cate was writing in 1936. Cate is best known for his book he published in 1936 at the actual height of the Great Depression in the 30s called The General Theory of Employment, Interest and Money. Basically he was arguing that unemployment could persist. Full employment wasn't automatic within a premarker of a capitalist economy. He might think that's a pretty obvious thing to point out when you've had mass unemployment across the world for several years during the 1930s. But actually economic orthodoxy then was still arguing that the economy would just automatically return to full employment. He argued it didn't most fundamentally because of demand. If there wasn't a demand for goods and services then firms would hire workers to provide those goods and services so you would have unemployment. But a part of our story was linked up with risk and uncertainty because an important component of demand is investment and companies won't invest unless they have confidence that future demand will pick up, will be demand for goods and services once they're newly invested in factories start producing. So uncertainty played a big role for Cate's and risk and uncertainty. The key distinction he built on was actually made before him was the distinction within economics between risk and uncertainty. The distinction is that risk is something you know for sure. So if you make a bet and you cost a toy to be heads or tails you know the risk of losing your money is 50%. The risk we have not came up heads is 50%. And there are all sorts of risks in the economy and in society where you do know the probabilities beforehand and you can calculate them and ensure against them with certainty. But Cate argued, again he wasn't the first, that not all decisions are like that. There are many which you don't know the outcomes for sure. Big questions like if he was around today, you know will Greece still be in the Euro in two months time? Will war break out on today's age? More likely in which country will war next break out? Those sort of questions are fundamentally uncertain and we don't know the probabilities. Maybe I'll tell someone to forget that fundamentally they can't be calculated in the same way as tossing a coin and knowing that the chance of coming up heads will be 50%. So that's the role Cain saw risk and uncertainty leading on to expectations, demand and the importance of that in driving the economy. Fast-forwarding to what happened leading up to the credit crunch or maybe I should backtrack to Cain's for a minute because in arguing how you tackle the global, the great pressure that he was writing in the 1930s and how you try to prevent a return to that when he was helping to devise the post-World War II international settlement, he actually saw developing institutions to minimise risks and uncertainties as being fundamental to making the economy work productively, including on a global scale. So he tried to actually get much more international regulation, much stronger international institutions in the IMF World Bank and so on than he actually managed to achieve. But the institutions that he did help set up the World Bank and fixed currencies in the National Monetary Fund and so on did actually oversee the most successful period of economic growth under capitalism ever given the 1950s, 60s and early 70s. But since he fell out of favour then, as we know, during the 1980s and 1990s, much of that regulation was paired back, fixed exchange rates were abandoned and so on. And what I think has largely gone uncoincidental or hasn't at least received the attention it deserves is precisely the topic of tonight's discussion about risk and uncertainty because there's been a huge growth in risk and uncertainty created during the 1990s and that won't pass 20 years or so. And that risk, that speculation, those gambles basically paid off for a lot of people during the 1990s, the last 20 years, a lot of people, companies got very risk, but they basically, one way of explaining this, they failed enough of those gambles, failed in 2007 and 2008 for the whole thing to come crashing down. And that's what I've summarised there, the 30 years of privatisation, deregulation, demutilisation, promotion of shareholder value, concept, allowing these financial markets to dominate a huge increase in financial speculation. Now what the orthodox say during the time this is saying was, well, to the extent that this was pointed out that the world was being made a riskier place, the economies were being made riskier, was that, well, those risks could be covered, they could be insured against and indeed a huge amount of money a growing proportion of the economy in Britain and America was made up by people doing precisely that financial dealers were insuring against these new risks that they were themselves creating. And that sort of mindset I think was epitomised globally by the role Goldman Sachs played over a couple of years ago in Greece before things got to their current state where it was discovered that Goldman Sachs had been setting up the financial deals to keep the Greek economy afloat, but then on the side it's secretly betting that the Greek economy would collapse when there is quite a striking example inside a dealing making bets when you actually know the inside story in this case, the fact that the books have been cooked and so the economy was bound to collapse sooner or later and of course Goldman Sachs knew the books have been cooked because they had cooked them. So that was quite a dramatic example and that was exposed and I would say within the UK a similar story with the story of Northern Rock which was at the time of the 2008 credit crunch became known famous or infamous globally because of the photos being put on the media around the world of people queuing up all night to get their money out of the back in the morning which was a picture which was quite common more than 100 years ago when banks were first being set up because people didn't really understand how it worked and really trust that the bank would have the money so as soon as a rumor went round that maybe the bank wouldn't have enough money, I wouldn't rush to get that money out and of course by definition the bank had the back so regulations had to be introduced to try and ensure that banks retained enough money. The case of Northern Rock is particularly ironic because they had been a mutual building society owned just by their members to lend money to their members for the purchase of the house but they were visu with that demutialisation trend in Britain by most building societies by one betrayed what demutialised tenants of private banks who then just joined in the frenzy of global speculation and the rumor went round which proved to be great they wouldn't have enough money to give back to the sabers who then queued up outside in the morning sure enough that there wasn't enough money there to pay them back. So coming on to my other research, this is one thing I've been looking at in the opposite sense of a mutual employer and business-based college has produced this report making the case for Northern Rock to be re-mutualised and indeed the coalition agreement that formed the current UK government has actually committed this government to greater corporate diversity in the financial centre including through the promotion of mutuals now given that the only realist way that can be done would by re-mutualising Northern Rock that look quite likely of actually now I think the smart one is betting that they won't do it and actually they're just re-neying on the coalition agreement unfortunately. I won't tell you more about the global credit crunch because it's set a lot in a lot of ITU podcast which if you don't know, all downloadable free of charge through the University of Oxford I think it's had 12 million, 18 million at least 12 million downloads of that podcast the most popular which I'm pleased to say is the public attaining education is one that's on philosophy Mario Torbis one which was number one globally for many weeks I'm afraid Linda Hughes of Teddy Hall and Ian Harrow had only got to number three third place globally which was sorry we got to second place globally which was frustrating not to get to number one but when we were second place globally we were keeping Barack Obama's inaugural speech in third place which I thought was very impressive so this is I think what happened with the credit crunch where they've just returned to business as normal there's enough shape to start making the same mistakes again which despite the global credit crunch having created that global recession in 2009 I mean that's something we just haven't been taken and we are still likely to slip back into a subsequent recession very briefly on the environment obviously there are huge uncertainties and I would argue and in a book that's all displayed at the entrance what's needed is that a lot more than just tinkering at the edges all tinkering with prices and taxes prices and taxes are important but just changing people's decisions at the margin isn't being enough you do need to complete behaviour change by companies, by managers and I think that can be done but it's a major step change and my secretary needed by governments in Britain and around the world through launching a major green new deal and other actions like that which are required the Oxford Professor David Henry has produced an amazing analysis of climate change and the annihilation of species on the globe going back millions of years in fact every time actually it's been caused by climate change evidence shows and he criticises the stern reports on environmental change which is very good in a number of ways but the main criticism he makes of it is relevant to today's discussion about risk because the next stern report talks about the discount rate and that's having to decide how much damage there might be in the future and what rate of discount we would apply to money we invest now compared to what difference it makes in the future David Henry argues that's just completely there the wrong way of looking at it that's assuming that it's completely comfortable like flipping a dice and having risk whereas what we're talking about is fundamental uncertainty and not really knowing what's going to happen we know that there's huge danger that there will be ecological environmental disaster so we must act now rather than just contemplating the margin and in fact I think that point was quite well made in a cartoon I tried to find but couldn't which is in the natural times a few months ago there were two Martians who had arrived on planet Earth and it was completely desolate and one of them was saying to the other oh dear I guess they must have chosen the wrong discount rate now I've been arguing that we'll agree with Keynes that economists, politicians should try and reduce the amount of risk and uncertainty in the economy but I thought it was important to acknowledge the counter argument that maybe risk and uncertainty is a good thing because it promotes innovation after all every time a company innovates there's a risk it might not sell a company might go bankrupt and so on and I'd say yes that's certainly true but it's completely different order of magnitude it's good to promote individual innovations by companies but one of the surest ways of encouraging that is actually to have confidence that the economy is going to grow into the future so they aren't incompatible with the two arguments and Keynes is actually the one which creates the best conditions to encourage innovation the counter view was put in some senses during the move against Keynes in the 1980s with the labour market deregulation the idea that doing away with labour rights and encouraging higher and higher mentality would make companies more innovative they could try something they didn't work they could just sack a few workers and downsize and try something else if that worked they could expand and so on and with a colleague we looked at the companies which had taken advantage of labour market deregulation in Britain had put people on to short term work or part time work and so on versus those companies that had just carried on regardless as before and hadn't taken advantage to see if there was a statistical difference between them and we suspect that they probably wouldn't because it's quite skeptical of that line of argument actually there was a statistically significant difference between them but it was the exact opposite of the one which supported the labour market deregulation policy making actually the companies took advantage of the labour market deregulation rate proved to be less innovative less likely to innovate and the innovative companies were the ones which hadn't taken advantage of that on the contrary when we then went to look to what those companies had done actually others hadn't actually invested in their workforce and training skills and so on and ironically as part of that creating those high commitment work systems as their learning management literature had actually given often times had actually given job guarantees in hopes that the labour market deregulation as part of that package and I want to start to think it through it's not that surprising if a worker thinks up a great way of doing away with their job they're unlikely to point it out to their supervisor unless they have a good deal of confidence that the company will use that to good effect to retrain them and expand what the company does rather than just abolishing the job and sacking them I think this is quite a nice illustration of that sort of short term thinking by board of directors the job of being a consultant saying your profits are plunging that's a problem the problem won't be easily solved the brains of the directors of the competitor companies are a size of a beaver's brain are a size of your brain to this board of directors to which a board of directors say cut the training budget again which is that sort of higher fire labour market deregulatory approach which actually doesn't lead to more innovation so having argued that that I think Cain Dwellgewright that an important part of eagron policy should be to try to introduce more stability and less risk one way of doing that is having a greater diversity of corporate forms if all your corporate forms are the same type say shareholder owned companies and some shop of the system and they all react in the same way it's likely to be quite destabilising the economy if you've got all sorts of different companies operating in different ways then the negative impact is coming with that much less and that comes back to the point I was making before about having a mutual building society sector of the financial services sector having more corporatives and corporate forms other than prior year PLC companies and that's a I'm in detail in another report that the centre did and we're actually commissioned now by the Building Society Association to devise a measure of corporate diversity because although the current coalition government is committed to making the financial services sector more corporally diverse not really they're not doing any better they're not even measuring it so they wouldn't know if they had succeeded given they're not planning to succeed maybe that's not so surprising but anyway that's what our research is currently trying to do so in terms of the lessons and conclusions I'd say for even my theory one way of describing it is that the economy isn't a machine where you just pull a lever and something else will happen and so crucially you can't just ensure against all uncertainties some things are just unknowable and so they are just because of gambles not really calculable insurance policies and in terms of economic policy then all the sorts of arguments that James referred to and himself devised which you can think of in one way just being buffers in the what will otherwise become quite a easily out of control free market processes so having I put a sound in the wheel there you may have seen in the papers talk about the Tobin tax something referred to as a Robin Hood tax the idea of putting a small tax financial speculation or financial currency trade which would raise beneath the pines globally a Bill Gates was quoted yesterday in the papers I think coming out in support yet and that's interesting because it's called the Tobin tax because it was first advocated by James Tobin who's no longer with us but he was a Nobel Prize winner when he economised and interestingly he didn't advocate it in order to raise lots of money to do good things like solve global poverty which is what Bill Gates did he did it because it would make economic markets operate less efficiently in other words the problem he saw even then in the global economy is that economic markets work too efficiently they will just become out of control it's good to put sand in the wheels to slow them down to make them operate less frenetically I guess he would say so automatic stabilisers refer to the fact that if economy goes into recession governments tend to spend more money on applying pens on tends to get the economy back up again so regulation of the Cains introduced fair trade to encourage producers in the third world to actually create confidence to give themselves power in bargaining against multinationals having the sort of corporate diversity of being talked about etc etc to do a lot less but the one thing that all these things have gotten in common is they introduce more stability of the system to make us less prone to risk and uncertainty as opposed to just promoting speculation now very very finally there's something called commission on ownership has been set up which is the Oxford Centre on Mutual Employment Business I mentioned is doing the research for which is looking at corporate ownership in Britain and how that could be improved including trying to tackle the logistic problem of British corporate decisions often being made on very short term bases is chaired by Will Hutton who at the time is chair of the World Foundation in fact he's just come to Oxford coincidentally to be head of Hartford College Sir Roger Carr has had the CBI Sylvia Jay has given it all next Thursday at Kellogg College and I'm hopeful that the results of this commission which will be published next year will make the case for corporate ownership involving more stewardship to try to make sure that the assets of the company continue to operate successfully over time rather than just try to speculate to make as much money in the short term as possible Thank you very much I've got one in terms of diversity was of the line theme there and Jocelyn used it as a biogiversity specialist and talks about biogiversity in housing while we talk about diverse housing planning etc. is the way forward but in terms of the logic of capitalism capitalism accumulation when it fights against diversity doesn't it looks to make efficiency looks to focus the forms of production means production so in the mutual ownership schema where diversity would seem to lead to profit the logic of the capitalist market go against that so what mechanisms would be put in there's an antilogic or the logic that acts against your diversity of being good and sustainably You're right here and it does need regulation and government action to make sure that in the case of mutuals the assets are locked in for the benefit of future members as well as just the current ones the current members and the reason that John Lewis which you may know is owned by his employees doesn't have any external shareholders the reason that's managed to fight off any attempt to turn it into a private company and enrich the current owners is the trust which owns it owns it on behalf of the current and future employees so it's happened to be an attempt to buy the company and it might be a good deal for the current employees to get 10,000 pounds each or whatever as a win for but not necessarily for the future employees and that's why the mutual building scientists were managed to fight off that predatory approach from private banks for 100 years because there was regulation in Britain as there is in most of the countries in the world to lock in those assets for the benefit of future members as well as the current members but what happened in the 80s was legal legislative changes to which opened them up to what can be known as carpet packets so we all could join the mutual vote to demutilise it together a win for payment perhaps also in the values we've built on by generations of previous owners so yes it does need if the current coalition government is going the only way it will achieve the aims that they commit themselves to in the coalition agreement is if they take legislative action to make that so Christine I was wondering how you defined innovation is the word innovation in terms of entrepreneurship or aspects of entrepreneurship Innovation generally defined to mean a new product or a new process sufficiently new different from the previous ones it's not just a different colour whatever there's a link with entrepreneurs is I guess an entrepreneur will generally be looking out for a new product or process as a way of making money or conversely maybe there's a new innovation that can be exploited if an entrepreneur comes along to exploit it although I can say that most innovations are actually both come across and exploited by existing companies that introduce themselves and often by the pain itself precisely to prevent the new innovation being exploited because they're making a lot of money from the current ones but it's a good question and I should have included a discussion of entrepreneurship when I said innovation but because of the kind argument to everything I've said the idea that having a loss of risk and uncertainty may be a good thing but having a loss of opportunity is for someone to step in take a risk and make some money that story always reminds me of the joke of the person who sees his old school friend driving by in a Rolls Royce and flags him down and says what was with the Rolls Royce and the person said I have a million hair and I said how did that happen he said hold on it's not a little bike shop it's not accessible so I developed a little car repair shop under the arches and then my uncle died and I inherited a million pounds and actually an economist did a survey of successful entrepreneurs to see what the key determining factors were I think it was done by Andrew Oswald he's now Professor of Warwick and was an Oxford and I imagine risk appetite was one of them but I must admit I remember the fact that it was the most statistically significant factor determining successful entrepreneurs from others and it was inheriting money so it hasn't been innovation is sometimes linked with entrepreneurs but often the other way around it's often existing companies which actually develop and exploit the innovations and often entrepreneurs aren't particularly innovative accountability take risks perhaps a type of one question is that okay and we want to deny it if that's the game you can bring other questions in the end is that okay if you look at other examples of where there have been schemes of preserving assets of future generations such as many more entails or inaliable sorry inaliable land of churches and so on eventually you come to a point where the assets can deal and you need to unfreeze them because they are no longer being productively useful or they are actively that they actually become a problem I mean have them create mechanisms in your processes which allow orderly transfer of assets which are no longer useful in a market economy companies fail fairly rapidly in companies which were huge at the beginning of the 20th century or even 50 years ago if you look at a company like ICI and have been replaced by others if you have a scheme such as mutual ownership which preserves the assets continuously for future generations or future generations of workers sooner or later that is going to become a problem every country deals with it slightly differently the first interesting point to make is that well over 100 years of capitalism I don't know the single capitalist country which has actually done away with corporates and mutuals they all do have legislation to preserve the assets the only thing about Britain is that they switched hugely in the last 20-30 years to have a far more dominant role for the PLCs which I think played a major part in creating the credit crunch and that recession was still suffering from one point though is that they all do allow mutual companies to go bankrupt if they fail if they don't do a good job but the point is that assets then have to be distributed to local charities and so on people can't make parts of a natural gain from it I'm going to talk really about work I've been doing recently on risk management in the built environment concentrates on large scale risks both natural and man-made in fact there's a distinction between natural hazards and man-made hazards is quite blurred climate changes are obviously the most obvious example I'm not really going to talk about climate change I'm going to talk about the impact of individual catastrophes work risks an interesting word especially from a business or a congress point of view because risk has a direction it can be a good risk as well as a bad risk so from a point of property developer they would look at upside potential which is a form of risk or downside risk which is the kind of risk we've already been talking about today and when we're talking about catastrophes and hazards we're talking about downside risks we're talking about bad risks my work's mostly in the context of cities I'm interested in systems based risks and my current work is starting to look at the applications of complexity science to management of risks it's complexity science is a project it is complicated and we live in a society which always beck calls a risk society he makes the point that risk is sort of the anticipation of catastrophe it's not actually the catastrophe itself and most risks don't materialize talking about this kind of hazard in the built environment are anticipated hopefully they're planned for but largely they don't materialize the difficulty is you don't know when a risk will materialize you don't know where it will materialize and Jonathan made the point the distinction between uncertainty unknowable, immeasurable and risk which can be calculated and managed I'm not going to worry about that distinction I'm just going to talk about a bit more generalized sense but the distinction is very important when you're making risk mitigation plans because uncertainty things you can't really know or calculate are the hardest problems to deal with and these risks can be classified there are various ways to draw up a taxonomy individual risk which is the risk to an individual property or a building not going to worry about that regional risk the Indian earthquake tsunami in December 2004 is an example it affected 14 different countries probably more casualties recorded in 14 different countries and there are difficulties there because of the mechanisms of global governance planning for a risk like that is probably done on the local or national scale is problematic in itself through to global risks even in this context you could even have intergenerational risks which we've talked a little bit about in the context of these mutual companies and these classifications can apply these aren't dichotomies they can apply at several levels at the same time so anyone who's suffered from a tsunami will have had individual risk to their own property and possessions and possibly their life as well as national risk global risk or regional risk so I'm going to talk for a moment about global catastrophic risk not really the focus of what I want to cover but it's quite important it's loosely defined to mean a risk that might have potential to inflict serious damage to human well-being on a global scale so it's a sort of alarming kind of risk and there are quite a few examples of global catastrophic risk volcanic super eruptions pandemic infection comet asteroid strikes sometimes these are called cosmic hazards then there are man-made global catastrophic risks nuclear accident out-of-control scientific experiments colliders war worldwide tyranny terrorism bioterrorism if you look at the literature on global catastrophic risks nanotechnology they are unknown what the consequences of some of these technical and innovative technologies would have there are other global catastrophic risks economic collapse is Greece going to leave the euro is the euro going to collapse and it's quite a long list but most risks aren't global most risks are at a lower level than global but they're still catastrophic and they make up quite a long list so I've put two groups of risk here natural hazards and man-made hazards because there's such a crossover between two fire, forest fire, bush fire you've seen these out-of-control fires raging on television well often they're called a bath so that's a crossover a blur of the boundary between natural hazard and man-made hazard and many of the things that happen on the natural hazard side have knock-on effects nearly every catastrophic risk that arises causes a whole series of other problems transport system failure supply chain failure maybe power failures so there's a cascading when one risk arises on to other risks and even innocuous things seemingly that aren't going to affect us on a regional scale have a bigger impact than expected the volcano in Iceland April 2010 all air traffic in Europe was grounded for seven days unprecedented serious economic consequences both for the airlines and the businesses involved for travelers businesses who aren't correctly involved in the airline business and some much more serious problems dire consequences for people with different medical conditions where travel transportation of medicines could be important or even critical so industrial accidents an interesting and problematic one and related to industrial sabotage the both pile disaster chemical plant disaster in India in December 1984 the world's worst industrial accident 11,000 people are estimated to have died both in 3,000, 4,000 in the immediate aftermath and the rest subsequently 100, 200,000 people have been injured or disabled by that disaster and it's generally thought it's caused by industrial sabotage so it might be classified as an industrial accident but it's caused by something else so it's crunched an employee and there's another quite significant point about this kind of risk and that is the spatial concentration of the impact both on the built environment in that area and on the population in that area depending on where you are you've got very few opportunities to relocate so if between 100,000 200,000 people are estimated to have been permanently injured or disabled and that's the size of a city of the UK Newcastle imagine that kind of disaster in fact it's hard to imagine that kind of disaster and there's a lot of politics that come into play in the case of the both pile disaster it's not generally acknowledged as an industrial sabotage although people in the sort of disaster and emergency community recognise that because of the settlement terms and compensation payments that's affected which came from union carbide the Indian government have never acknowledged the actual cause of the accident it's always blamed on problems at the plant and that's not said a lot about problems at the plant but the problem about piles is one as well because of other factors there's no existing catastrophe plan in place in 1984 for that plant hospitalers didn't even know how to treat the kind of chemical injuries that would arise from that disaster so it was a sort of water shed really it's inconceivable that you could have a plant of that size with that kind of impact and no assessment at all of the consequences so catastrophic risks not global catastrophic risks annually cause tens of thousands of deaths they cause billions of pounds of losses and some of these losses you can insure against that's certainly in western economies that's the main way to mitigate potential financial losses but figures from the insurance industry is a global figure that isn't for a single company in 2005 losses from catastrophe were reported at US dollars 230 billion US dollars and out of that 230 210 billion are from natural catastrophes natural disasters and in that particularly 173 billion is due to Hurricane Katrina so one single event took up 173 billion out of 210 billion worldwide losses at the same year Kashmir earthquake in Pakistan the losses are about 5 billion mostly uninsured that earthquake killed 76,000 people in New Orleans death toll is obviously much less but the value of the assets was so much higher and that's the reason for the difference between 173 billion of Katrina and estimated 5 billion for an earthquake in Pakistan there's a lot of reasons for that death toll the building codes haven't been firstly they probably haven't been followed but only recently in Pakistan have they been put into place so older buildings wouldn't withstand an earthquake if you take the case of the 1989 earthquake in San Francisco it was a similar scale similar magnitude that was 7.6 magnitude the earthquake in California was 6.9 magnitude and a couple of hundred people died most of those died on a freeway a two-tier freeway which collapsed called Cypress Freeway Oakland that had it had been strengthened for earthquake resistance but they had failed to take account of the soil it was built on marshland that was an unusual accident so in an industrial advanced nation earthquake similar size have a very low death rate compared to a different to Pakistan in that example so that's some of the risks many of them can't be avoided they have to be managed and a large part of the management of these risks involves having a plan in place that can be could in effect as far as possible to mitigate the problems if the disaster actually strikes so this is a spiral model showing disaster risk management in this side we've got post-disaster recovery but on the other side we've got pre-disaster risk reduction phase and it starts with a risk and vulnerability assessment and then risk reduction disaster recovery but then you have the impact so this impact may not happen and depending on and probably won't depends where you are in the case of Hurricane Katrina there was a 0.33% annual chance of a flood in the New Orleans so over 30 years that's a 10% chance of a flood and yet they didn't strengthen the levees when the storm surge hit 53 levees were brewed in New Orleans so one approach would have been to strengthen the levees another approach would have been to have an effective evacuation plan which they could have didn't have so having an adequate plan introducing risk reduction measures in that case would be strengthening the levees or the defences if you want to evacuate you're not always possible depends on the kind of catastrophe you're going to experience but in the case of Katrina that they could have evacuated and then you move into the post-disaster recovery phase immediate relief the emergency response the transition phase and reconstruction and you learn lessons from what happened in that disaster so you move into the outer hour where you're trying to have disaster prevention with sustainable development so the important first step is the risk and vulnerability assessment I'm not going to go into that in any great detail but there are four risk assessment questions which you need to ask the first one is what can happen what can go wrong so that's the scope and the second one is what's the likelihood that it will happen what's the probability and that question may or may not be able to be answered it depends on the problem third question what's the cost if it does happen and that's actually usually where the questions start in the literature but the other relevant question I think it's probably the most important one is what's the cost does preventing it cost because the way to do this evaluation stage risk and vulnerability assessment is almost certainly cost benefit analysis that's the tool for the policy tool for analysing whether to take steps or not to take steps cost benefit analysis is a topic in itself it involves often especially in this kind of task to making decisions about the value of a life or the actual literature about the value of a life but the thing I stress is that the assessment of management of risk this phase of risk and vulnerability assessment is a synthesis of several different things an amalgamation empirical and normative judgments quantitative and qualitative judgments and objective and subjective these things it's about trade-offs from a public policy point of view those trade-offs are complex because there's a myriad of economic organisational institutional sectors that interact and the thing as a whole can be viewed as a large scale complex system this Indian Ocean tsunami is a prime example of the problems with this kind of planning as policy makers pay too little attention to this kind of disaster for several reasons it's got a low probability but if it does occur it creates enormous losses truly catastrophic consequence in the case of the 2014 army I think there were 230,000 people died in 14 countries the problem for policy is partly the political time frame politicians at the limit of terms of office will discount or ignore low probability events this is saying statesmen think about the next generation politicians think about the next election so another factor is complexity in modern society systems of governance may not be in place to handle this kind of catastrophe so it makes it difficult for officials to respond because there's quite a spectrum of risks against which cost justified measures are warranted but they can't easily respond to them because either of the political time frame or the complexity of the organisation the institutional context I would say the question I talked about earlier is this relationship is blurring of the boundary between man made and natural disasters I'll spend a moment on the idea of a man made natural disaster set aside the small matter of climate change but let's have a look at a couple of short slides so there's a earthquake in Lancashire coast we don't really get earthquakes in the UK as much as we do but we don't get serious earthquakes so in May on BBC news two small earthquakes no casualties or damage and just the other day was 2 November it is found and it was always suspected this was the case that gas extraction off the coast is called fracking triggered these two earthquakes so that's potentially quite alarming you can have earthquakes caused by man's activities in this case it's a very small problem there are three main causes of earthquakes and one of them is artificially induced earthquakes and the most common example of that is called reservoir triggered seismicity so it's for non tectonic not caused by the plates moving or the usual reasons we imagine there being an earthquake the US Geological Survey recognised 11% of earthquakes in stable continental regions are from non tectonic origin and the 2008 se shwan earthquake sometimes called the great earthquake in China May 2008 it's a huge earthquake caused by a slip on a known fault 68,000 people killed 374,000 injured 5 million people left homeless and it's thought that that is triggered by a reservoir by a dam that was built the Zipingu Dam project constructed a few hundred metres from the known fault line that's highly contested mainly by Chinese authorities and Chinese scientists the latest articles been published by Chinese scientists entitled evidence that the 2008 earthquake could not have been induced by the Zipingu Reservoir titled things to be true south geologists from everywhere else believe it's probably triggered by this weather 68,000 people killed and the summary of their article concludes that the cause is some unknown tectonic change I'm going to enter all the statistics of the water that's filled this reservoir but but it's pretty well established that non tectonic reasons man-made reasons can cause earthquakes so that's a problem I'd say the converse a close related problem almost there is the problem of natural hazards causing man-made problems and the Fukushima comes to mind here earthquake with a magnitude of nine fourth largest seismic event ever recorded and obviously the consequences with the nuclear power plants two nuclear power plants in Japan and the coastal region are pretty catastrophic that's on our list of kinds of accidents it's an industrial accident nuclear accidents are probably amongst the worst there's only amongst the ones that cause the most panic and fear in the population without going into the arguments that they're very emotive it's built in an area that's on the seismic brismap but the defences simply weren't adequate I'll stop there I'll be back thanks so much do we have a couple questions on Niger before we leap into the third I guess I have a devil's advocate question in terms of if we look at nature society discourse research there's one argument there's no such thing as a natural hazard a natural events so a hurricane on that on the St Ivan is actually a very positive it's part of the hydrological society cycle it provides water it allows that should we say the biosphere of that island really to exist similarly in Earthquake, Mike seems a holy positive genitial process of how the Earth itself is transforming so in terms of is it possible to say there's no such thing as a natural hazard there are hazards to humans sometimes those hazards are made by humans but overall there's nature is the privacy of nature argument is a good argument and it's actually right but if you're living in a given built environment that's affected by that hazard you will not find it acceptable and you may hope your government or you have participated in preventative measures so the problem is that there's also a counter argument we're part of that, we're part of nature as much as in the answer the built environment arguably is natural we are part of nature built to this environment but every built environment sits in a natural environment and is subject to the long cycle of things that happen in its own natural environment so I definitely wouldn't disagree with that but it's the age old thing in the general case what you said is right for the individuals concerned a government wants and indeed that community will want to take whatever measures they can to protect themselves well it's a pleasure to be here I've spent the last 10 years working with technology companies as a manager consultant and my mother keeps trying to look proud of me trying to figure out what I do for a living but now that I've been able to tell her I'm speaking at Oxford I can see the true gleam in her eye so it's such an honour to be here I've worked with technology teams for several decades now my original industry background was at Apple and Microsoft and then I did a wave of web 1.0 internet startups and then I started this consulting practice working with technology teams to accelerate product development and work with them on organizational change and I spent a program at the IE school coming over several times over last year on organizational leadership and one of my professors took a shine to me and encouraged me to pursue doctoral work and that is what brought me here today and I'm so pleased to be working with Professor Mickey and my supervisor Dr Snokes is in the audience and Professor Dobson at the business school and I wanted to explore a bit about my perspective on how project teams in technology environments and new product development have to deal with risks so it really all starts with this curve this curve's been around for a while and like all good x-axis it's time and particularly I wanted to talk about project time where projects are something with a beginning and a measurable goal and the y-axis here is the cost of making a change so over the duration of the project is more expensive in subsequent phases of new product development to have to institute a change and when I ask technology teams well where do you find many programs particularly those that are having difficulty making changes well they start populating out here and even more out there these are the ones the projects that everyone remembers and of course one of my favorites is examples is this this is the Hubble telescope it's much more expensive to fix a lens while it's in orbit than when it was back on the ground before it was launched and one of my other favorites is the Mars climate observer this was where the Pasadena team was calibrating the metric units and they figured it out while trying to go into orbit around Mars so apparently 100,000 km an hour does not equal 100,000 miles an hour and the poor Mars observer kept going past Mars these are what we call the do-over projects so the whole thing that makes talking about risks interesting is simply if you can leverage this curve so pay me out there I'm going to be acknowledged for being a diehard American to changing my units for this discussion so what if we spend some money here and that is really what risk mitigation looks like is that pay me later or pay me here and all of this of course mitigated by probabilities of various impacts and whatnot in this world what you're looking to do is fail often and early and that's really the core best practice of trying to complete well any activity whether it's planning your next birthday party or getting a new product development off how can we increase learning and you want to cause lots of failures and then just reduce a few that you have to deal with out there and this has both linear effects and wins on how teams they actually make schedules but you get huge non-linear wins because if you are doing all sorts of things your product development and often these are bending the company type activities for smaller companies completely failing you can't recover if you are more predictably investing resources here to uncover and play this game then you're much more likely to have the bandwidth to deal with the occasional big screw up that comes at the end so it fundamentally shapes the rhythm of companies not just the success of a given project or a given team so you show us the technology teams and everyone nods on the violent agreement and then we wind up with a classic situation of what you know has little to do with what you do that's kind of the nature of human beings if it did then we'd all be eating how more healthy and we'd be at the gym more and no one would be left in the world smoking and the joke is that the next piece of knowledge is probably not what would make the difference you know one more surgeon general or minister of health report is probably not would cause the change of behaviour around smoking so what is it that gets into the way of action and this is a very interesting question both in practice and academia and something that I'm very interested in in my work and you know it's really all expressed in this wonderful illustration some of you might remember from the poster for this talk so if you were driving a car and you were blindfolded what's the first thing you might do? you know remove the blindfold yeah what if you didn't realize you were wearing a blindfold that issue is actually the scariest and contains the key seeds that cause difficulty in risky product development it's that you don't it's the volatility on what your volatilities are it's the fact that you don't know what the issues are this is one of my favourite illustrations it came from a magazine that on the economic disaster of several years ago and this is the picture and the worm or that's what you think it is and I thought this was a brilliant discussion of what happened so if you're a bird in a world where there's lots of things that look like worms that aren't what can you do? and that actually is at the core of the type of research that I'm looking that I'm interested in doing and the type of work that I do with companies all right it's kind of in this flavour like why do you have this? people are good at talking about what they know they can call meetings they can list all the things they know we're comfortable at doing that type of thing we're also reasonably comfortable at talking about things we don't know like you know when you can name your problem you can say look that up I will talk to an expert sometimes you need a little encouraging but these are situations that are actionable you may not be interested in taking action on losing weight but you know that there is action that is possible what's in the other category? this is what you know this is what you know you don't know right this is a much harder list to generate this is the we don't even know we have a problem we don't realise we're wearing a mind fault and this is kind of the the real joke and access to identifying things that start in the know we don't know is really one of the most powerful things you can do to create an environment to take action on risk these are the things in the blind spot ok and one of the things you find is that the things that screw up projects are not the thing everyone's worried about it's the thing they have the least experience with and so that immediately creates an opportunity for action identify what we know what we're doing that's brand new and then maybe we can just become smarter at it to even know to know what those problems are but what happens in practice well there's a lot of this right looking around there's a lot of how do teams talk about risk well they don't little crickets how's this project going to screw up well that's not a question you hear a lot sometimes you do and actually where you do you often are an environment that is better at new product development than environments that don't and then we're going to talk about this is a very powerful place to create core cultures that facilitate this the other way that you get is you get lots of talking or screaming or they screwed up they don't know what they're doing all that wonderful stuff that human beings love to do and a matter of fact when I survey teams around this you hear all this wonderful language well what about risk well there's nothing we can do about it it's not my job they'll never change no one wants to hear it risks are all surprises they'll take this criticism and I'm doing everything I can anyway does anyone heard that recently on any projects has anyone said that and this is part of the normal discourse and it's it's not a high tech problem it's a human beings problem you know in the face of our humanity what can we do to increase the likelihood that we uncover risks well this is kind of my work but how can the use of language both the form of the conversations the nature of them the ritualization of language around risk and commitment and this is I've been doing a lot of this in practice but I now have the opportunity to more systematically review this academically and this is what my doctoral work is about and of course I'm building on these are my favorite giants of the week I'm only a term into this so I'm still learning what I don't know, I don't know and who I really need to be reading but issues of sense-making of Fefford and Sutton are two of my favorites at Stanford, complexity theory, Eisenhart Pestallig of course the great Amist Fertsby who actually was one of my advisors at Stanford at Hayhom Hdm areas of decision analysis Ron Howard also wanted mine and then we got the classics Little Schopenhauer, Victor Einstein Donald Sullett in Promise Space Management I think he has a lot of and he has done a lot of interesting work in this and then the role of language and trust in organizational change is something that I'm looking in and what has turned me from a social psychologist to a sociologist of quite in addition to Dr. Ventresta at Oxford is Clifford Gertz and his work in thick description ethnography and I think that this has inspired me to do the specific type of dissertation work that I've begun to explore all right so I wanted to talk about a particular academic research that I'm currently looking at so this is trust right and then we have reward and then there's a question of what's the role of trust the ability to be vulnerable of teams i.e. let's say to talk about risk to talk about why we would fail some research has begun has identified is that trust and project performance are related but through commitment on the level of the project so if you can create trust you increase the level of project team commitment that then causes has a correlation with increased project results and this is an area that I am currently exploring now one of the things that I want to bring into this is the work in the case of Solence Minoza around reliability that there's a relationship between making promises, keeping them increasing trust with trust being a well established and well studied area in organizations which leaves increased commitment which then creates more promises and that there is a feedback mechanism that if you can jump start and crime may have a particular correlation with project team result in risky environments and this is the kind of work that I want to more systematically study and this is my thing I think this is central to the concept of making interesting promises that create trust and in this so discussions of risk are intimately tied with discussions of commitment so if we look at kind of creating this culture this environment that encourages the identification of where we're wearing blindfolds the identification of where we can uncover what we don't know, we don't know so we have some basic dynamics of culture that things that drive culture and this is pretty much a derivative of classic organizational culture, shine being of course one of the grapes in that what I'm looking to explore is inserting language into this game of what drives culture who knows maybe one day there'll be something like that okay now I don't trust to leave you with the question if you're looking at how to prescriptively is there something you can do tomorrow assuming you've got a team and you want to identify risks so a couple things that I've observed and of course that I've worked with teams on that I'm looking to more richly develop the academic study of is get teams that are required to talk about risk like every week it's not a question does anyone have a risk what are your risks what are your top risks that's what they do for a living and we have a joke I'll just map it because of the conversations that if you're doing a project doing really well then you'll hear about the earthquake risk which is we have nothing more to worry about except well I do a lot of work in Silicon Valley well we're located on three faults and there may be an earthquake if that's what you're hearing a cross functional empowered team that is being creating a culture of transparency around risks then there may be some data that you're ahead of the game if you're still hearing about we have no person to test the new hardware system you know you don't quite have that luxury okay it was mentioned and I just talked there's the anticipation a risk is an anticipation of a bad outcome which actually is rooted into a belief about the present so if you're the reason why you're worried that you may not test your product is we have no test engineers encourage people to uncollapse their language and talk about what are they concerned I may be concerned I may get into a car accident but my existing fact is my tires are balding it has a dynamic about reducing drama and creates an increased accessibility to action and the point of talking about risks is so we can take action we can actually if we move things from the don't know we don't know into the know we don't know then at least we can decide where to put our money if we don't even know that's an issue then we can't even have that conversation and when teams at first are scared to death about talking about risks once they see that it creates an opportunity for action then it becomes a self-fulfilling organisational cultural dynamic and this is what I want to further explore so where does it leave me as I leave here well you know I have aspirations to be an ethnographer there's a lot of quantitative work but I think having spent time with dozens and dozens of technology teams I think there's an opportunity to tell their stories as they see it around risk and around commitment and this is one of my most favourite most inspired pieces of work was Tracy Kitter's Soul of a New Machine and it's a wonderful story of the 70s of the creation of the data general eagle mini computer and I think there's an opportunity to tell more stories from a academic a more academic and rigorous perspective and I look forward to doing that and recording literally what is the language because that's an opportunity to re-engineer you know what are they saying and what could they be saying literally what's the conversation that's the human beings that's one of the biggest things we do we talk to each other how does it correlate to performance and of course how and why indeed that was great to talk on board I'll have to make more mistakes more often to see that's brilliant to get cracking any questions for Adam and then we'll be time for questions for three presenters where you're talking about communication which seems to be underlying the problem and modern software teams where they may not be co-located right and what's your well so there's a whole dynamic of virtual teams and multi geography teams and the interesting thing is but also with that we have many more mediums hyper-connectivity and ways to communicate and you know what I put on my sociology hat it's like we have human beings and plenty of ways to not talk to each other with all the additional twitters and social networks that we have and so what it's about is creating a commitment to have quality conversations then simply how you manage that becomes a means and you know teams that operate virtually the core dynamics if they have a commitment for a high level of high bandwidth effective communication then they find ways to make it work and teams that don't have that commitment despite all the video conferencing and other mechanisms they may have will not have that level of conversation so that's really taking it a step back and make sure that that's you know this is how we operate our organizations and then can solve the rest just like you can solve any other things and obviously it does create some interesting logistical investments and need for a logistical investments and a commitment to make that happen getting back to Professor Mickey's observation about innovative teams estimates in their teams which I wholly consistent with my perspective and if you want people to talk you've got to give them time to talk and places to talk virtually across time zones across geographies. So in your talk I noticed that the previous talk benefited a lot from hindsight analysis of catastrophes and when you draw this famous on the ramspread matrix and you talk now about language and getting people to talk about what the beliefs about the presence are so you can extrapolate it to the future it almost sounds like if you take it to an organizational level that you get people to actually discover what they really know and what they are going to wear and in that sense and then yours mentioned Amos Tverski who talks a lot about Errol Carnaman who talks a lot about that this risk come actually from that we will be in our bubble we will take the inside view so how is it really to how can language really help tearing people out of their system and their system of thinking to see these things Excellent and this is a big issue right you know I don't want to pretend to have the definitive answer but two places that I look is first a formalization of language there are particular I would argue that certain ways to communicate risk I sort of implicitly alluded to it like this concept of talking about the existing fact as well as your concern about the future that is a structure you know people get coached in that and they actually take on hey this is how do I make sure how do I more effectively communicate a risk or my perception of the universe and I find this works incredibly powerfully cross-culturally as well the other thing a place to look is complexity you know and complex adaptive teams that if you you know put well meaning committed folks and let them bump into each other you will get well you know emergent complicated systems and ways to play each other play with each other and it takes on its whole life of its own and what it takes is what are your initial conditions you know so how are you setting how do you create a team in an environment such that when you then you know you're not micromanaging every minute of their life but that they they will interact with each other in a more useful way more often than if you started them with a different set of initial conditions sounds very obvious sounds very simple Chris Halkiris 25 years ago did a study of this sort working with teams trying to change the way they thought and found it was incredibly difficult to get them out of their modes of thinking and you might go back to those words yes yes please as I said you know I'm in the middle of my very very starting my literature search please if any of you have a recommendation I would be very you know let me crowdsource my literature review please steer me in direction I would love to look at that one thing that you have in modern society is the duration of projects and the duration of product life cycles are so much shorter that you have an opportunity for much more rapid learning and so the world you know everything is pressuring individuals to become more adaptive to be able to make their mortgages and you know there's nothing like mapping into personal incentives you know the life of guaranteed lifetime employment is less of a reality and so people get a little more excited about that particularly when you show them how they can win you know and when you can do that in a shorter time frame it increases their interest yes please we'll meet offline I will I will get it to you thank you so much I appreciate it or you can whisper it to my you know dark or surprising are there any questions to each other but also to Jonathan or Nigel I was just wondering how we put the three sessions together because we started off with a market analysis and then another analysis talking about catastrophe catastrophic risk and then another analysis that we have with people and teams and there's definitely a link between three but is it coincidental when you sort of come up with these three things or is there a is there something that we should round off the session with in terms of a general hypothesis well I suppose that this is an organising seminar so the random the random selection that volunteers to be speaking so I think it's interesting though I was thinking I sort of had a colleague I'm sorry I won't let the speakers answer properly but I was talking to a colleague who knows about risk and I said you know what give us some sort of background and stuff and I was told we said well basically everything's risk and I thought great that's helpful so and then an offer Janet Finterson who was my favourite office and she's also an entrepreneur and I was just thinking how to bring these three together and actually a normal notion of value is of interest and Janet Finterson wrote she wrote what you risk reveals what you value and in some ways when Jonathan was talking about the notion of entrepreneurship innovation there's that element of value laid to side and how risk fits into that so maybe some element of risk and value of lurking across the three of them value in your shelter, value in your built environment value in your economic social, as well as your physical environment but I'll probably let the experts answer far more lucidity so if John Finnell Well one thing that says maybe the importance of not only interdisciplinary cross-disciplinary discussion but also institutions and culture across these questions and that's somewhere where economists I think are usually particularly guilty at drawing to institutions and culture entrepreneurship actually economists often presented as completely divided all the institutions and culture that actually tend to make companies successful which I have had more times that have given me the opportunity to tell my favourite joke which is George Bush's Christmas of the French economy when he said that the French economy is the French of no word for an entrepreneur I didn't know I'd volunteered but he said it was difficult because he was getting volunteered I volunteered but he volunteered that was a technical voluntary I think they are closely related but they can be related at the interdisciplinary point and one of the my thoughts about these disasters and global catastrophic risk particularly is post disciplinary people involved in a very wide range of disciplines but all of the underlying decisions about how you tackle, address or plan for a disaster are bound up in many ways with market risk with the size of government, the role of government which is all going on in the economic side of it and if you come down to the smaller if you wanted to get a plan together of the kind I was describing you're going to have to create a team and many of the points that Adam was talking about not in terms of the risk of the product failure but how teams communicating get to the end results successfully are all in that team that's a slightly disingenuous way to link them together the one thing I would say is listening to my colleagues was the incentive system the measures of the game determine it I have the luxury frankly of working for for profit innovation companies I don't know how to do my work for the government because I think one of the things that you are identifying is you get some interesting incentives there as you certainly get in the private industry as was explained short term profit, sacrifice of employees on the on the altar of next quarter's EBITDA these are very real dynamics and they incent the types of conversations they provide the context one of the most decisive context for the types of conversations that take place in organizations I think one of the interesting things in terms of the seminars are meant to bring all aspects together so one of the practical aspects of risk that I thought might come through is actually doing research and I think later I work on urban violence so I'm never really at risk but clearly it's a risk filled environment for the interviewees and those working living there but in terms of risk I think maybe later on the new graduate school is setting up a series of research method workshops so I know Adrian and Christina are organizing those but that element of risk within doing research a practice of research is something that we haven't covered today but I think in terms of doing stuff risk is very interesting it's not just filling a form but it's also the ethical risks researchers take but also the risks that interviewees take as well in getting engaged in research so that's probably something maybe that practical aspect of research will feed in more into later discussions around gender and maybe revolution I don't know whether Tom was the cause and Nicolagio you maybe were not cause there's practical aspects as well as theoretical aspects of the topics I think were something that we can bring in Just for me it was I was making big connections between the first and the second and I thought Jonathan was going to go on to well organisational structure capitalism and putting industries like the nuclear industry in prioritising for instance management of the nuclear legacy in the UK it's currently going on with very little debate about it and potentially potential for this catastrophic risk which you put me into the hands of the market sector so there's a big connection there with the people interface for instance technologists are you talking to technologists are they having a sufficient voice in these big decisions that have been taking place at the moment so I think there's a lot more of a connection between the three sessions there Thanks very much Arthur Thank you all for attending today I mean the idea is to show something about the interaction engagement within the college for the members of the department and out with but it's also a social occasion so we will have a wine drinks reception in the common room and then there is a dinner in the akron room so will we proceed into the common room now but I'd like to especially thank Liz Sanders at the back who's done all the organisation who's brought these seminars together Thanks very much Liz and also Paul for working beyond hours to make us live on the web or live later on the web so thank you very much and I'd also like to thank our three speakers Jonathan Nigel and Adam for kicking off the Rural House Research Series and do come to the next revolutionary research seminar in February so thank you very much indeed and I think Liz will lead the way to the drinks reception so thanks so much indeed to the speakers