The cost of delaying risk decisions

New Zealand is good at responding to crises. Whether it is an earthquake, a flood, a drought or a major storm, there is no shortage of examples of communities, iwi, businesses and public agencies stepping up when needed.

In the year to February 2026, IAG recorded 46 storm events across the country – about one every eight days. Against that backdrop, response and recovery have become part of how New Zealand talks about itself.

Yet several recent reports suggest a less comfortable question. As demands on resources, infrastructure and communities grow, are we creating enough space for decisions that reduce future exposure, or are we becoming trapped in a cycle of responding to immediate challenges while longer-term risks continue to accumulate?

The Climate Change Commission’s 2026 national climate change risk assessment, IAG New Zealand’s A long-term approach to natural hazard risk reduction and the Cost of stopping report from Civil Contractors New Zealand, Infrastructure New Zealand and Water New Zealand, approach the issue from different angles. Together, however, they point to a common theme: what happens when immediate pressures crowd out longer-term decisions.

For directors, that tension is familiar. Boards regularly weigh competing priorities, balancing today’s operational demands against investments whose benefits may not be realised for years. The reports suggest the same tension is playing out more broadly across New Zealand’s infrastructure, planning and risk management systems.

The Climate Change Commission identifies significant risks across infrastructure, emergency management, government funding and governance. Of the 10 nationally significant risks identified in the assessment, one of the more striking concerns is pressure on decision-making itself.

The assessment notes that decision-makers can become “caught up in urgent responses that take time and resources away from planning for the future and reducing harm”. The observation extends well beyond climate policy. It is also a governance problem for organisations and public institutions.

Awareness is not the problem. New Zealand understands the risks posed by natural hazards. The IAG report estimates natural hazards have imposed at least $64 billion in direct costs over the past 15 years.  

The harder task is acting before those risks become crises and options begin to narrow. Many of those risks sit beyond the boundaries of any single organisation. Transport networks, energy systems, communications infrastructure, supply chains and workforce availability all influence how well organisations can withstand disruption.

IAG’s report also argues that New Zealand’s approach to natural hazard risk reduction remains fragmented. It identifies 42 gaps and future needs across planning, knowledge, incentives, resources and governance that limit New Zealand’s ability to reduce natural hazard risk. Rather than focusing only on how communities recover from disasters, the report places greater emphasis on reducing exposure in the first place.

As the report notes, “These choices cannot be avoided, only deferred, and delay will increase both their scale and their cost”.

That observation is echoed in the Cost of stopping report, which estimates that stop-start infrastructure investment has cost New Zealand about $11.8 billion over the past 25 years. Its main argument is that delaying decisions does not eliminate costs; it often increases them. Stop-start decision-making can erode value over time as rising costs, changing priorities and repeated reassessments make projects harder and more expensive to deliver.

Projects may be paused, redesigned, reprioritised or cancelled, but the underlying need remains. Delay often shifts costs into the future rather than removing them. In some cases, taxpayers and ratepayers end up funding the same work twice, while communities wait longer for infrastructure upgrades, renewals and resilience investments. Delay can become a cost in its own right, reducing flexibility and making future decisions more expensive and more constrained.

Taken together, the reports challenge a tendency that extends beyond government and infrastructure planning. Responding to immediate pressures often feels more urgent than investing in prevention. The IAG report estimates that around 95% of natural hazard expenditure over the past 15 years has gone towards response and recovery, with only a small proportion directed towards reducing future risk. Recovery attracts attention because the need is visible and immediate. The value of prevention is often harder to see, particularly when the costs are incurred long before the benefits are realised.

Directors will recognise the dynamic. Organisations face constant pressure to prioritise near-term performance, manage emerging risks and respond to changing conditions. Long-term investments can be difficult to defend when benefits sit beyond the next reporting cycle and may not be realised for several years. Yet many of the decisions that determine how well an organisation copes with disruption are made well before a disruption occurs.

Asset management, capital allocation, supply chain design, insurance arrangements and investment priorities all influence how an organisation responds when conditions change. Once major decisions are made, they can shape outcomes for decades.

This is particularly relevant when considering physical risks. The Institute of Directors’ 2025 Director Sentiment Survey found that only 45.6% of directors say their boards regularly review the adequacy of their risk management approach to climate and environment-related physical impacts, such as storms, floods and droughts. The figure rises to 76.2% for listed companies, 70.4% for local authorities and 61.9% for government organisations, likely reflecting the direct implications for infrastructure, assets and service continuity.

The survey also found that directors continue to identify infrastructure planning, policy reform and political volatility among their key concerns. While these issues are often discussed separately, the reports suggest they are closely connected.

Long-term risk reduction depends on consistent decision-making, stable investment pathways and the discipline to act before options narrow. The Cost of stopping report suggests that once options are constrained, rebuilding momentum can be costly and time-consuming.

For boards, the ability to withstand disruption is rarely a standalone issue. It emerges through decisions about investment, infrastructure, operations, supply chains and risk appetite, often long before disruption occurs. Those decisions influence not only whether disruption occurs, but how costly and difficult it becomes to manage.

There will always be events that cannot be predicted or prevented. Some risks can only be managed once they arrive. But a consistent theme across the reports is that many future costs are set in motion long before a crisis occurs. They stem from decisions postponed, investments deferred and difficult conversations avoided.

The country’s capacity to respond will always matter. So, too, does its willingness to make time for long-term decisions before the next crisis demands attention.  

Good governance has always involved making decisions before circumstances force them. The reports serve as a reminder that the ability to withstand disruption is often decided years before it is tested. By the time the consequences of delay become visible, the range of available choices may already have narrowed.