The Risk Society: social democracy in an uncertain world



It’s October 2007, and Newcastle has just been hit by another massive storm. As the flood waters recede, politicians from all sides line up to give their condolences – but in a break from tradition, they fail to announce any financial assistance for the flood victims. “Natural disasters are a part of life” says Prime Minister Howard, “we expect responsible families to plan ahead for this kind of thing”. Premier Iemma echoes the sentiment: “the state government can’t be expected to foot the bill for every act of god”.

Sound unlikely? It probably is. Not only do most people expect governments to act as ‘the insurer of last resort’ when disaster strikes, we also expect them to play an active role in calculating and preparing for the risks facing their citizens. Hurricane Katrina demonstrated just how serious the consequences can be when a government fails to live up to this expectation.

In a new discussion paper, ‘The Risk Society: social democracy in an uncertain world’, CPD fellow John Quiggin examines the role of government as the ultimate risk manager. He argues that risk will be the defining concept of the 21st century, the way that globalisation was for the 1990s.

Download The Risk Society

Public discussion of uncertainty has become increasingly sophisticated. For example, weather forecasts now routinely cite probabilities for rain on a given day, whereas only a few decades ago, such concepts were considered too difficult for the general public. More significantly, the notion of a trade-off in investment decisions between risk and return is now widely understood. In public policy, risk-related concepts are increasingly discussed in quantitative terms, rather than in abstract generalities.

Any party aspiring to win this year’s election will need to grapple with ‘the great risk shift’ – the increased exposure of individuals to everything from the vagaries of international finance, energy and labour markets, to the risk of a complete collapse of our environmental life-support systems.

The kind of deep-seated anxiety this exposure creates will not be soothed by assurances that the economy is booming, or exhortations to change our lightbulbs or buy green power.

The risks and uncertainties shared by all require a shared response, argues Quiggin.

This does not mean that we should try to protect everyone from every possible risk – overly zealous or misplaced risk management can stifle innovation and creativity. But what we can do is take a long, hard look at what kinds of risk are best managed at an individual, government or business level.

In an increasingly high-risk world, any government that fails to do this may be headed for a perfect storm.