–The repeated criticism made about regulators of record is that they can never keep up with the latest maneuvering of those they regulate. Were that the only problem!
–Since there is so much the regulator has to keep on top of, it is in a permanent state of managing or coping with setbacks in doing so. To see why, I quote at length from Reliability and Risk (2016), where we describe the schematic full cycle of the real-time operations of a critical infrastructure under regulation:
Figure 7.1 introduces an idealized version of a single infrastructure’s entire operational cycle, covering all system states from the perspective of its control operators and other reliability professionals (including their support staff). . .Beginning from the left side of Figure 7.1, this infrastructure’s control operators typically maintain operations within (de facto and de jure) bandwidths of reliable system and performance conditions. Notice that “normal” does not—cannot, as we have seen—mean “invariant”: adjustments are to be expected within bandwidths to enable adaptation to a stream of contingencies and unpredictabilities. . .
Control operators enter a crisis condition when they confront or anticipate conditions that threaten their cognitive skills to understand a situation in terms of recognizing patterns and to respond to a situation in terms of formulating action scenarios that they then translate into strategies of action. A crisis could begin with loss of communications or some other requirement for the management of their control variables. The crisis starts for control operators when they are pushed to operate at the edge of or beyond their domain of competence, where skills and task requirements are matched.
. . . .[T]his team situational awareness of the crisis might not correspond to an actual disruption or catastrophic loss of service; it may well precede it. The time period for the crisis from the perspective of the operators may be advanced in every phase over public perceptions and even the perceptions of organizational or political leaders. The latter may see the crisis only at the point of loss of service. But by the time that stage is reached, control room operators could be on the road to restoration or even beginning recovery. . . .
The crisis begins a period of intense and focused attention on recognizing what’s actually happening: discovering a pattern or patterns and assessing action scenarios. This activity can restore disrupted service. . . If failure occurred, the recovery takes a different form of problem-solving activity on the part of control room operators. The focus shifts from narrowing attention on understanding the particular character of the failure to expanding the scope of factors attended to, including related infrastructures, in pursuit of recovery strategy. Recovery necessarily involves many outside organizations and personnel whose actions have to be carefully coordinated if it is to be successful. . . .
In nominal terms, the whole cycle of infrastructure operations ends after recovery, when control operators are at a new normal, with scenarios and patterns added to their management repertoire, along with new facilities and equipment as well as with any new regulatory or policy constraints. The “new” in the “new normal” could be above the old normal’s performance effectiveness. But it could also be below. Untried equipment, hasty reorganizations, or new regulatory constraints imposed from a public-accountability more than a reliability perspective may leave control operators and other reliability professionals with far fewer options and more unstudied conditions than they confronted before the crisis.
–While imposition of the last mentioned new regulatory constraints is with respect to the “the new normal,” the regulator of record is present at every horizontal and vertical point in the infrastructure’s whole operations cycle, if only to ensure regulatory compliance.
As the entire cycle, including the stage of normal operations, is dynamic, so too it must be for the regulator.
–Focus now on those dynamics. The probability of system failure (Pf) changes along the horizontal and vertical dimensions (Pf often being higher in recovery). As such, talking about regulating risks depends on where you are in Figure 7.1: regulation of the risk of disrupted services before any actual service disruption, (2) regulation of the risk of failed services if disrupted infrastructure services are not restored, (3) regulation of the risk of failure in recovering services, and (4) regulation of the fresh risks in a new normal for the infrastructure post-recovery.
–The upshot? This challenge of the regulator–which is to be as differentiated in regulation as the whole cycle is for the infrastructure being regulated–isn’t just “a challenge.” Yet labeling it “an impossible task” doesn’t help either, for where goes the infrastructure, there must go the regulator of record.
In my view, it is better to say that at best the regulator of record is in permanent setback management; at worst its own activities require the coping behavior associated with emergency management. Either way, the regulator in terms of its own cycle of operations never recovers fully; indeed it may be reactive response all the time. Or if you’re on the optimistic side, recovery is its new normal.