Regional Growth Risk Management

Holistic planning with systems modelling

Regional Growth Risk Management

Regional municipalities, cities and towns often have to plan and invest for population growth as either mandated by themselves or by higher levels of government.

If population growth is accommodated with appropriate investments in infrastructure today, a region can expect to reap significant rewards in the future, such as an increase in employed residents, increases in economic prosperity and tax bases to support and sustain community services.

Planning to accommodate growth is however a complex task and regional growth comes with its rewards, costs and risks.

In order to determine and analyze these, a region is required to simultaneously understand the interactions across its capital and operational departments and have actionable measures to balance its development across multiple, interconnected avenues.

Regional growth planning requires a holistic approach to planning, not silo-by-silo planning. This requires a region and its environment to be modelled as an interconnected system. Growth decisions are necessarily made in the context of the impacts on the entirety of the system. Without a holistic appraisal of the complete profile of risks and benefits associated with planning decisions, traditional economic and population analysis, no matter how accurate, will only capture a fraction of the consequences.

For this reason, our clients use our socio-economic, agent-based simulation platform to overcome the complexity of understanding how the risks of growth can emerge from a complex and interconnected socio-economic system. Our internally consistent and multidisciplinary analysis leads to the appreciation of the dependencies of planning decisions on the whole system over time.

Our systems-oriented approach involves modelling the region’s investments and financial accounts within the context of the larger socio-economic complex of the region so as to understand the impacts and sensitivities to economic trends, markets, geographic location mapping and the policies of other levels of government. This holistic approach allows for the appreciation that plans and decisions made today not only have pervasive impacts over time, but also across many individuals, firms, government organizations, and other stakeholders both within and outside the region.

Rewards of Growth

Most policymakers and planners have a good sense of what the potential rewards for growth may be. This may include growth statistics such as population, regional economic activity, employed residents, jobs in the region, and private capital investment. Areas which are less well understood include:
  • Knowing who benefits within the region and beyond its political borders helps with identifying alliances, finding funding solutions and making the case for others to do their bit for growth.
  • The taxation revenues generated for other levels of government and whether those benefits are reinvested to optimize the success of local growth.
  • The impact of the investments that are meant to be made by other levels of government. The policies of other levels of government can either accelerate growth or impede it. Knowing what these risks are and their significance is vital for growth planning and management
  • The timing and size of investments required to realize the rewards of growth should be respected, otherwise, a region could be at risk of building bridges to nowhere, having water/waste water investments stand idle for decades or not having enough social services to accommodate changing and growing demographics.

Costs of growth

Usually, a regional growth study will involve estimating the operational and capital costs of growth for the region and its municipal government in response to a growth plan. This involves modelling different infrastructure types, tax and utility supported operating and capital budgets and municipal financial accounts within the context of the larger socio-economic complex of the region so as to understand the impacts and sensitivities. In addition to this, knowing how the risks of growth could challenge the assumptions behind the financial modelling of costs and funding commitments is important so as to not have unexpected and unfunded challenges in the future

Growth as a process of risk management

Growth is one of the riskiest initiatives that a region may face, and it requires a modelling environment that is realistic, can handle the complexity of a system with many moving parts, and that can generate actionable management insights. Growth risks can be sourced locally or outside the region. A failure to appreciate the complex interdependencies between infrastructure, regional policies, competitive policies of other regions, policies of other levels of government, risk generating results that may be inaccurate over the long term causing the underutilization of investments and large mismatches with the costs of growth experienced by a region and its ability to pay for them.

Some of these risks have been referred to above. Other risks include:

  • Not optimizing for place, size and timing
  • Missing the correct mix of industry sectors
  • Miscalibration of fiscal tools:
    • Putting the cost of growth onto the wrong stakeholders and beneficiaries.
    • Growth not incentivized by market-driven forces leading to unsustainable funding situations for government.
    • Fiscal tools used without assessing the associated market and behavioural impacts can lead to unintended consequences and ultimately higher costs to residents.
  • Stranded debt from growth that didn’t occur as expected
  • Impacts of other levels of government
  • Changes in other government policies are a major and often overlooked risk to regional growth.
  • The inability to communicate risks to other levels of government severely undermines a region’s growth risk management process.
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We are trusted. More than 400 leading organizations in Canada and the UK, including governments, associations and businesses trust our services and data products. With over 20 years of critical thinking and analysis across a range of socio-economic and strategic issues, we have a deep knowledge of regional and local communities, their resources and the challenges they face.
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All of our socio-economic analysis, across 800 topics and over 56,000 local regions, are modelled as one system in one simulation platform ensuring the quality and consistency of insights generated across all locations and topics.
Our systems approach allows for best-of-class data generation and forecasting from hyper detailed trend and causation analysis.
Regional information that extends beyond traditional data sources to ensure that the best information on local area populations and economies can be utilized.
Hyper detailed information accompanies our insights, predictions and forecasts. Hyper detailed trend and causation analysis is determined by data with little reliance upon assumptions.
The sheer richness of our data and simulation capabilities, both in terms of who, what, when and where and the relationships between them drive an ability to answer many more questions.
As a strictly data-driven firm, we are necessarily apolitical. The consistency of our hyper-detailed local data can be summed and independently verified against official projections by government statistical agencies, central banks and the OECD.
Our dedication to a one-model systems approach with hyper-trend and causal analysis keeps assumptions to a minimum. Any assumptions are shared openly, so you and others can use our results with confidence.
With modern technology, methods and access to data, high-quality socio-economic analysis and data should not cost as much as it does. We’ve made the investments and are keen to disrupt the industry with highly cost-effective services that matter to you.

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