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• Infrastructure Development

• Infrastructure Stocktake

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1. An important aspect of national infrastructure management concerns the potential for failure of infrastructure. Following some major disruptions overseas - both accidental and deliberate - a number of countries have begun to examine the vulnerability of their economies, and their societies more generally, to the loss of normal supplies.

2. In New Zealand this issue has tended to be seen as a matter of business continuity, on the grounds that normal commercial imperatives would ensure adequate management of the risk. As a result of doubts about this assumption, and increasing concerns about the potential for sabotage, the Department of the Prime Minister and Cabinet has undertaken some preliminary investigation of infrastructure security.

3. For the purposes of this study, the starting point was the definition of New Zealand's critical infrastructure used in the Cabinet submission when the Centre for Critical Infrastructure Protection (CCIP) was established in 2001:

Critical infrastructure is that infrastructure necessary to provide critical services, whose interruption would have a serious adverse effect on New Zealand as a whole or on a large proportion of the population, and which would require immediate reinstatement. New Zealand's critical infrastructure has been identified as those assets and systems required for the maintenance of: governance including law and order and national and economic security; telecommunications and the Internet; energy including electricity generation and distribution, and the distribution of oil and gas; finance and banking; transport; and emergency services. [EXG (01)58]

4. A small interdepartmental working group has explored possible methodologies for identifying and assessing risks of failure, and then creating control options. This was tested on a few cases, and has shown that formal assessment processes have considerable promise as means of dealing with specific threats or risks. In view of the scale of effort needed to improve the situation, and the lack of a formal mandate, the work was put on hold pending the outcome of the Infrastructure Stocktake. The interim conclusions reported to the Committee of Officials' for Domestic and External Security Co-ordination in June last year were as follows:

1. As New Zealanders become more directly dependent on having guaranteed access to reliable infrastructure systems in their day-to-day activities, and as those systems become more complex and interdependent, so too the risk exposure increases for the normal social and economic functioning from both accidental and deliberate disruption.
2. In New Zealand's case, factors such as the small-scale, the lack of redundancy or reserve capacity, and the increasing interconnectedness across different systems, tend to complicate the risks of disruption from technical failures, natural hazards, sabotage, and terrorism.
3. Improving the security of critical infrastructure is a quite different task from the usual practices that constitute national security, and that are normally undertaken by central government. Moreover, while there may in some sectors be a natural congruence between business reasons for avoiding failure and national strategic interests, this point cannot be taken for granted.
4. Any efforts to strengthen national infrastructure reliability and security would require a new paradigm based on collective responsibility involving all stakeholders - the private sector, user communities, local government and central government. That process would not be trivial exercise, as the initial efforts in Australia, Canada, United Kingdom and United States have shown.
5. While New Zealand's small scale of infrastructure should make it relatively easier, our resources to do the job are small. It is important, therefore, to begin with a good understanding of the full span of national critical infrastructure and assets, their importance, their inter-linkages, vulnerabilities, etc.
6. Controlling and mitigating risks to critical infrastructure could add significantly to costs for owners and operators, so efficient investment of resources is of paramount importance if we are to go down that route. For this reason it would be important to use systematic methodologies to ensure that risks/threats are assessed and evaluated realistically, then treated comprehensively. (Critical infrastructure is not an area where some action is better than none; interventions can introduce new risks, and can use resources better applied elsewhere.)
7. As yet, no country appears to have developed comprehensive risk management methodologies of the sort that might be used to analyse and manage a nation's total system of infrastructure and assets. A number are working towards such ends, and are investigating risk management methodologies.
8. Preliminary work has been undertaken to identify the various sectors of critical infrastructure in New Zealand, and to explore the significant risks to people, the economy, the environment, and social fabric. This shows promise as a means of understanding the national system of infrastructure and identifying vulnerable elements, but is still at an early stage.