What processes can ensure policy risk mitigation
Policy making is critical to any institution / governing body to ensure the systems attain their intended outcomes. How do we assess that the policy is properly designed ? How do we address intangible consideration ?
In this blog, I would like to share how I conducted policy assessment as a bureaucrat in the government of India. I worked on several government policy initiatives. In theory, policy assessment feels like a straightforward approach as we were balancing demand and supply through delivering a public service through policy making.
Making policy involves looking at the trade-offs that are involved in choosing an alternative option. To identify a right option, it is critical to look at the policy through four lenses.
Cost Benefit Analysis
If the aggregate of the gains that accrue to those made better off is greater than the aggregate of losses to those made worse off by the policy choice.
Process:
- Identify all short term and long term costs and benefits
- Measure the tangible costs and benefits in monetary terms
- Use a discount rate (which adjusts change in value over time, to ensure that all are expressed in commensurable terms)
- Estimates intangible and qualitative considerations
- Aggregates, or totals, the cost, and benefits
Tangible Methods:
- Measuring Net benefit
- Opportunity costs,
- discount rates (to measure future benefits today)
Intangible Methods:
- Contingent valuation methods (Questionnaire or interviews with individuals) – an estimated value people attach to an activity
- Sensitivity Analysis – Analysts can eliminate sensitivity of discount rate by reporting on several different rates.
Cost Effectiveness Analysis
It is important to assess any other alternative options will deliver desired outcome without affecting human lives
Process
- To measure the values of intangible benefits such a human lives
- Compares different policy alternative producing same results at relative costs
Risk Assessment
There are inherent risks in each policy planning because of trade- offs. Measuring the chances of risk will help us to plan a mitigation strategy in case of unintended results.
Process:
- Identify, estimate, and evaluate the magnitude of risks to citizens
- Reducing risk conveys a benefit to public and this benefit can be part of cost benefit analysis
- Risk (R) = Probability of the event or exposure (P) X Higher the consequences (C)
- Risk evaluation is acceptability of the risks or a decision
- Risk Managment is government’s ability to regulate
Forecasting
Forecasting in government setting is a hard task to achieve, largely due to lack of data related on the past policy success.
Intangible factors makes it impossible to forecast an outcomes
Process:
- Producing factual information about future states of society on the basis of prior information about policy problems
- Expected revenue – cost of providing service
- projected amount (An) =Inital cost (P) (1+rate of growth) ^ number of years(n)
Delphi method:
Asking experts to estimate future conditions, scenario development, and even simple monitoring of trends
In conclusion, with proper tools at hand policy assessment can be achieved successfully. The most critical part is to identify the intangibles factors that are involved in each trade-offs we make during the policy planning process. As many human lives are effected by each choice made during policy making, it is important to carefully plan policy implementation, designing feedback loop from community and ethical sensibility.
In Human Hands 
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