–Conflation of the physical system managed with the area of system impacts should the system fail is common. The spatial area managed by a water supply or electric grid is not the spatial area affected by indefinite loss of water or electricity. Large critical infrastructures may be operated within regions, but regions are not systems managed on their own in the same way critical infrastructures with central control rooms are.
To see how this matters, picture a stylized relationship between the probability of levee failure (Pf, e.g., 1%, 0.1%, 0.01% per annum), the estimated cost per mile of levee stretch to bring it to high safety standard, and the estimated loss in economic value (including foregone earnings due to loss of life), should levee failure occur at a given Pf. One relationship is the diagonal read from the upper right to the lower left (my thanks for Robert Pyke for the figure):
The dotted line assumes that the losses in economic value of a levee breach decline as levees are brought to a higher, more costly standard with reductions in the probability of levee failure, Pf. What is managed directly is maintenance at a levee standard and the associated Pf; only indirectly is the “economic value of levee breach” managed..
–If you counter that this impact-shed is “the system to be managed,” then you beg the larger question: What infrastructure manages the impact-shed in terms of the consequences of levee breach (Cf), including economic losses?
Answer: Cf is most pertinent to the emergency management infrastructure, and not the flood and levee infrastructure as in the illustration. The time period for the former involvement may well be limited (say, six weeks to three months after the disaster), leaving the bulk of the recovery to those infrastructures that manage systems–e.g., roads and waterways–and not the respective impact-sheds.