What if? The Social Infrastructure Missing from the Risk Map
Nathalie Ballan, The Equator Company
Imagine a Monday morning in a rural municipality where an industrial company employs six hundred people. The charity-run daycare center isn’t open due to a staff shortage. Neither is the day center run by the private social welfare organization in the neighboring parish. By mid-morning, dozens of workers have already called in to say they won’t be coming in, or that they’ll be leaving early, because someone has to stay home with a two-year-old or a parent who can’t be left alone. If the situation drags on for a week, the problem shifts from absenteeism to production.
The scenario has been constructed. The mechanisms that underpin it are real, and this is the exercise proposed by the title of the GRACE conference: to ask what happens when the very thing we depend on—without even seeing it—fails.
In Portugal, 83.8% of social services are provided by nonprofit organizations, according to the 2023 Social Charter: daycare centers, residential facilities for the elderly, day centers, and home care services. The social economy as a whole accounts for 5.2% of the country’s paid employment. At the European level, the European Commission estimates that 7.7 million women are out of the workforce due to caregiving responsibilities.
These figures describe infrastructure in the strict sense of the term—a foundational system that enables other systems to function. The power grid supplies energy to factories. The care network provides them with people available to work. The difference lies in how each is treated by companies. The power grid is included in business continuity plans, has redundancies, and is monitored. The care network rarely appears in any risk management document. That is what makes it invisible: it falls outside the calculations of those who depend on it.
Social resilience is often described as a community’s ability to absorb shocks and recover. Across much of the country, it is these organizations that ensure this capacity on a day-to-day basis. And the infrastructure that provides resilience has little margin for error. In 2023, the average utilization rate for daycare centers was 87.3%, and 89.9% for nonprofit organizations. A system operating near maximum capacity struggles to absorb an additional shock, whether it be a heat wave, an epidemic, or the departure of part of the staff. The pandemic demonstrated this in nursing homes. The difficulties in recruiting and retaining care professionals, along with the reliance on cooperation agreements with the government that are renegotiated periodically, have been part of the public debate in the sector for several years.
When this network weakens, the cost rarely appears where it originates. It emerges later and in scattered ways—in absenteeism, in people leaving the labor market (especially women), in high staff turnover, and in the difficulty of retaining staff in sparsely populated areas. None of these items is labeled “failure of the local social network” in a company’s financial statements.
Enterprise risk management already has a language for this, developed in another field. In recent years, companies have learned to identify their dependencies on nature, water, soil, and pollination. The TNFD (Task Force on Nature-related Financial Disclosures) It provided them with a method, and the European Sustainability Reporting Standards (ESRS) incorporated this concept. It is less well known that these same standards recognize dependencies on human and social resources as a potential source of financial risk for companies, alongside dependencies on natural resources.
TISFD, the international task force on inequality and the disclosure of financial information related to social issues, launched in 2024, published the first version of its framework this year. The focus is clear: impacts, dependencies, risks, and opportunities related to people. The logic that brought our dependence on nature to light is now beginning to be applied to our dependence on people and the social systems that sustain them.
For most companies, this does not stem from a reporting requirement. The ongoing European simplification effort has removed many companies from the scope of the CSRD. The management issue remains the same, with or without a reporting requirement: understanding what the operation depends on and what happens when that dependency fails.
This leads to three steps that any company can take.
The first is to include reliance on the local social network in the risk analysis. Just as exposure to a critical supplier or a supply disruption is assessed, it is possible to evaluate what portion of each facility’s workforce depends on nearby daycare centers, nursing homes, and home care services, and what the effect of a reduction in that capacity would be. In many cases, the conclusion will be that the risk is low. In sparsely populated areas, where one or two providers account for nearly all care services, the risk may be high.
The second is to understand this network in the areas where the company operates: what organizations exist, what services they provide, what their capacity is, and what their weaknesses are. Some of this information is public, as found in the Social Charter and in the assessments of municipal social networks. Other information can only be obtained through direct contact. Few companies have gathered it.
The third is to build the relationship before a crisis strikes. When a fire, a flood, or an epidemic strikes, the companies that are able to provide targeted assistance are the ones that already knew who to call, what was needed, and who was most at risk. A stable, long-term relationship, built on mutual understanding of each other’s needs, is more effective than a generous but improvised response.
Treating this network as infrastructure also requires respecting its nature. These are organizations with their own mission, governance, and autonomy, which serve communities before serving any company. The relationship that matters is that of partners with shared interests in the continuity of those same territories.
The November 24 conference asks, “What if?” For this infrastructure, the exercise has a rare advantage: it can be conducted before the scenario unfolds. The risk map of a company that depends on people remains incomplete as long as it does not include the network that enables those people to get to work.
