Lloyd’s of London has partnered with independent analysts at Chatham House on a new study of the opportunities and risks of arctic development. The 53 page report addresses both government and private sector responsibilities and concludes, among other aspects, that:
- Further research is required to ensure future development takes place sustainably and does not cause irreparable damage to the environment.
- Full-scale exercises based on worst-case scenarios of environmental disaster should be run by companies with government involvement and oversight to provide a transparent account of the state of knowledge and capabilities, to foster expertise and to assuage legitimate public concerns.
- Companies have a responsibility and interest in establishing industry-wide standards and expectations for safety and stewardship, through the Arctic Council, through the International Maritime Organisation or through industry associations. Failure by one company will have impacts for others.
- Integrated ecosystem-based management, incorporating the full range of economic factors, is needed in order to avoid one activity harming and displacing others and to take full account of the cumulative impacts of development. Long-term viability should be a key policy consideration for governments, business and other stakeholders.
- The mosaic of regulations and governments in the Arctic creates a multi-jurisdictional challenge for investment and operations in the Arctic. Working through the Arctic Council to promote high and common regulations for Arctic economic activity is key. Both domestic legislation and international agreements should adopt a safety-case analysis rather than a prescriptive approach to risk management. States should provide strong and transparent oversight through appropriate government agencies, aligning risks and incentives for private companies with the broader public interest, and ensuring that private economic interests do not overcome legitimate public concerns.
- Governments should be clear about the purpose and scope of military activities in the Arctic, so as to prevent misunderstanding or miscalculations from developing.
- Given the extreme and fast-changing risks facing companies in the Arctic, robust risk management approaches will be vital to allow sustainable economic development and to ensure that all stakeholders can beneﬁt from economic opportunities. In addition to embedding a risk culture throughout the organisation, adopting best practice standards and implementing practical risk mitigation measures, any comprehensive risk management approach is likely to consider transferring risks as a key part of the strategy.
The report and a summary is available at http://www.chathamhouse.org/publications/papers/view/182839