The last three years have brought profound challenges to the systems that underpin our economy and society. With climate change, natural disasters, the pandemic, the war in Ukraine, supply chain disruptions, cyber attacks, and other threats, shocks, and stresses, our communities and businesses have suffered significant setbacks. Furthermore, our infrastructure assets have become more vulnerable than ever.
Warnings from experts in climate science, geopolitics, and cybersecurity, as well as risk management organizations, have been issued for decades about the increasing likelihood of significant shocks. While their warnings have not gone entirely unnoticed, it is time for society as a whole to take heed.
Over the past 30 years, senior decision-makers have enjoyed a relatively stable external risk environment for the development, commissioning, and management of infrastructure assets. However, this stability is a historical anomaly, and there are many reasons to believe that the challenges and uncertainties that have characterized the past few years in Australia will persist
SHIFTING THE MINDSET FROM OPTIMISATION TO RESILIENCE
The focus on maximizing efficiency by optimizing infrastructure assets made sense in a stable threat environment. However, there is a trade-off between optimizing asset operation and embedding resilience against external shocks. A shift in the collective mindset is needed, and risk and resilience must be at the forefront of decision-making. Every business decision-maker must consider worst-case scenarios and embed risk and resilience into all business functions, rather than seeing it as someone else’s job or simply creating a business continuity plan and putting it away.
BRINGING AN ‘ALL HAZARDS’ APPROACH INTO LAW
Australia’s Critical Infrastructure Act was passed in 2018, focusing on minimizing vulnerability in high-value infrastructure assets. The act encouraged an “all hazards” approach, considering various types of hazards and designing responses to withstand them. However, there are many assets not classified as critical infrastructure that are still essential and challenging to retrofit. It is important to consider correlated or cascading risks and less obvious pressure points, such as components of vulnerable asset networks.
UNDERSTANDING THREATS AND PRIORITISING RESPONSES
The challenges posed by climate change, cyber attacks, and supply chain disruptions are immense, making it infeasible to individually assess the vulnerability of every piece of infrastructure. Instead, a risk-based approach is needed, mapping assets against a granular understanding of threats to expose the points of greatest vulnerability. These assets should be prioritized for investment and included in Asset Management Plans.
HARNESSING THE VOLUME AND POWER OF DATA
Despite the complex threat environment for infrastructure developers and operators, there are abundant data and tools available to make sense of the challenges. From climate models to user data and machine learning, there’s no shortage of information or technology to manipulate it. The challenge is to integrate and digest the data to enable it to tell a clear, simple, actionable story for long-term decision-making. This no longer needs to be the sole domain of specialists in risk.
IT’S A BUSINESS NECESSITY
Decision-makers may feel overwhelmed by the complexity of the challenges posed by external shocks, but it is essential to develop an understanding of how these shocks may affect the operation of an asset base over the long term to make informed decisions about long-term investments. Good asset management practice includes incorporating these investments within future capital expenditure programs to protect assets from failure. An appreciation of the risk environment will be critical for both governments and businesses seeking longer-term financing and service quality.
BIG CHALLENGES CALL FOR A COMMUNITY OF SOLVERS
The need for resilience in Australia’s infrastructure is a shared challenge that requires collective effort from all levels of government, industry, business, and advisors. While work towards a more resilient infrastructure sector is already underway at a strategic level, it needs to be applied at a more granular, localised level across the country. Decision-makers need actionable insights to manage their specific infrastructure risks and make informed long-term investments. With the right tools, it is possible to understand the nature of future threats and invest in resilience to ensure that infrastructure remains stable and secure through adversity.