Strategic Risk Management: To understand the challenges of risk governance and its application in managing systemic risk in a practical setting.
Climate change issues are now a global concern, especially for businesses and governments around the world. To address the consequences of climate change, world leaders and businesses made commitments to limit global warming below 2°C with the aim to achieve 1.5°C due to the systemic impacts of climate change. On 13th November 2021, climate change conference (COP26) ended in Glasgow with more ambitious commitments and actions to achieve 1.5°C target. Although the total global emissions should be reduced by 45% by 2030, many of these commitments and statements to reduce the global emissions are merely intentions and non-binding, indicating the dangers of reversing the consequences of human and business activities to the pre-industrial era. In its Nationally Determined Contributions (NDCs), the UK government made several strong commitments and targets to achieve carbon neutrality by the year 2050. These commitments include but are not limited to the following key areas:
1. Decarbonising the power sector fully by 2035. This commitment involves introducing of renewables, including 40GW of offshore wind, and the total spend of £120m on nuclear projects. This commitment also includes the plan to offer £5,000 grants (loans) for householders to replace their old gas boilers with low-carbon heat pumps and by 2035 no new gas boilers will be sold in the UK.
2. Carbon capture and storage and increased production of hydrogen and biofuels. A commitment of £140m from the UK government to accelerate industrial carbon capture and hydrogen.
3. Improved investments for the electrification of vehicles and their supply chains. Funds for railways, buses and cycling and a commitment to produce 10% of aviation fuels from household waste, flue gases from industry, carbon captured from the atmosphere by 2030.
4. Commitment of additional £124m for nature restoration ensuring total spend of more than £750 million by 2025 on peat restoration, woodland creation, and management. The restoration efforts will include approximately 280,000 hectares of peat in England by 2050 and trebling woodland creation rates in England, contributing to the UK’s overall target of increasing planting rates to 30,000 hectares per year.
As a risk management analyst, you are expected to provide a single academic report recommending how the outlined ambitions can be realised through a proactive and effective risk management strategy. You must select only one of the four commitment areas presented above and address the following tasks in your report:
1. A critical appraisal of the UK government’s motivations/drivers for your chosen or selected commitment or plan and their implications for the UK economy and society
2. Critically analyse governance issues in risk management, and using the knowledge gained along with relevant models/frameworks, discuss how the selected commitment can be effectively implemented to achieve its motivations and intended objectives
3. Recommend to the UK government how the selected plan or commitment can sustain the UK economy’s resilience while reducing people’s vulnerabilities.
