Framework for Managing Local Economic Development Risks Emeritus Professor Brian H. Roberts, Brian.Roberts@canberra.edu.au ABSTRACT Effective management of risk events in local governments and communities is important to ensuring the sustainability of local economic development (LED). As urban and regional economies become more integrated into the global economy, their exposure to risks increases and the management of these becomes increasingly important. Policy makers face increasingly exacting choices about which risks to manage, how to measure the level of risks, who determines acceptable levels of risk exposure to communities and the most appropriate strategies to manage risk. These are demanding questions to answer, as risks by their very nature are difficult things to predict or fully understand. This paper elucidates upon the application of a risk evaluation technique, Multi-Sector Risk Analysis (Roberts, B.H, and C. Tabart, 2005) 1 , to develop a framework for pre and post risk strategies for managing local economic development risk in cities and regions. The framework was used for developing sector industry risk management strategies and plans for selected industries in Canberra, Australia. INTRODUCTION Risks are things we are all familiar with. They are events, factors or exchanges which have the potential to cause damage, result in harm, or disharmony, which bring about uncertainty in individuals, communities, governments, businesses and economic systems. Risks may be real or perceived. At a personal level we learn to develop strategies to manage risk every day. At community, national and global levels, however, this becomes more difficult. In a world where cities and regions have replaced nation states as the engines of economic growth and development (Harris, 1997; WBI, 2010), identifying ways to reduce the potential impact of risk events and factors that have the potential to damage the productive capacity and social cohesiveness of economies will become an important part of local economic development (LED) planning and strategy practice. Unfortunately, there are few best practice examples of regional economic risk assessment and management strategies to be found, and there is a need for much more research into the subject. This article presents a framework to assist local governments, businesses and communities to develop strategies and actions to manage local economic development risks. The article draws extensively on work undertaken several years ago on risks affecting the Australian National Territory (ACT) economy of Canberra, and the development of strategies to mitigate these (B.H. Roberts & Tabart, 2005). Much of the research to develop the framework was exploratory and developmental, using a range of established and new research techniques to investigate risks affecting the ACT economy, and strategies and actions to improve risk management of the economy. Local Economic Development Risk Local Economic Development (LED) risks are events or situations have the potential to create uncertainty or harm to local economies. LED risk events may be triggered by endogenous or exogenous factors or actions. Their impacts are often multi-dimensional – including physical, economic, social, environmental and psychological. Some risk events are dramatic, short-lived, and devastating. Others are slow and imperceptible, but can be equally devastating in their impact upon the local economies of cities and regions. Many studies have been conducted on the impact that risk events have on LED. Risk events such as terrorist attacks, earthquakes and typhoons, pandemic disease outbreaks and bushfires have caused significant damage to local economies and have had reverberations globally. September 11 was estimated to have cost the New York economy $US83 billion (NYC Partnership, 2002). The Fukushima Earthquake was estimated to have caused between $150 and $250 billion of damage and will reduce GDP by 2-3% (STANLIB, 2011). The ongoing impacts will continue for many years, just as they have with the Chernobyl disaster. 1 The author is indebted to his former research assistant Christine Tabart for the research and analysis undertaken as part of the ACT Risk Analysis Study, which this article draws upon. AcademyPublish.org – Risk Assessment and Management 200