Risk Management Principles

In accordance with the three major components 'complexity, uncertainty, and ambiguity', one can design different risk assessment and management strategies depending on the degree or intensity of each component. For example, if a risk is characterized by high complexity, low uncertainty, and low ambiguity, the main emphasis will be on scientific modeling and consensual methods for performing a most accurate assessment. If a risk is characterized by high uncertainty, the main emphasis will be on reducing vulnerability of the system to cope even with surprises. In a situation of high ambiguity, a more discursive approach with stakeholder participation is asked for in order to find an acceptable way to reconcile conflicting values and world views. More specifically, risk handling can pursue one of four strategies or a combination thereof. These strategies are summarized in Table 1 and described in the following paragraphs.

1. Simple risk problems. This class of risk problems requires hardly any deviation from traditional decision making. Data are provided by statistical analysis, goals are determined by law or statutory requirements, and the role of risk management is to ensure that all risk reduction measures are implemented and enforced. Traditional risk-risk comparisons (or risk-risk tradeoffs), risk-benefit analysis, and cost-effectiveness studies are the instruments of choice for finding the most appropriate risk reduction measures. Additionally, risk managers can rely on best practice and, in cases of low impact, on trial and error. Staff members of risk management agencies, industrial risk managers, and experts in the field are the only groups that need to be involved for dealing with simple risks.

2. Assessment-based strategy, including the search for numerical thresholds (emission levels, concentration levels, performance standards, tolerance levels, etc). Within this second strategy of scientific risk analysis, risk management relies on the best scientific estimates of probabilities and potential damages and uses expected values as main input to judge the tolerability of risk as well as to design risk reduction measures that are cost effective, proportional to the threat, and fair to the affected population. In this frame, precaution may best be interpreted as being conservative in making risk judgments and choosing cautious assumptions when calculating exposure or determining safety factors (of 10, 100, or more) to cover intertarget variability. Since risk assessments for complex problems rely on sophisticated models and simulations, a broad representation of the various scientific communities, including the social scientists, is required to assure a broad and inclusive handling of the risk.

Table 1 Risk characteristics and their implications for risk management

Knowledge characterization

Management strategy

Appropriate instruments

Stakeholder participation

'Simple' risk problems

Complexity-induced risk problems

Uncertainty-induced risk problems

Ambiguity-induced risk problems

Routine based:(tolerability/ acceptability judgement) (risk reduction)

Assessment-based strategy

Resilience-based strategy

Discourse based

Applying 'traditional' decision making Risk-benefit analysis Risk-risk trade-offs Trial and error Technical standards Economic incentives Education, labeling, information Voluntary agreements

Characterizing the available evidence Expert consensus seeking tools like: Delphi or consensus conferencing Meta analysis Scenario construction, etc. Results fed into routine operation

Improving buffer capacity of risk target through: Additional safety factors Redundancy and diversity in designing safety devices Improving coping capacity Establishing high-reliability organizations

Using hazard characteristics such as persistence, ubiquity, etc., as proxies for risk estimates Tools include: Containment

ALARA (as low as reasonably achievable) and ALARP (as low as reasonably possible) BACT (best available control technology), etc. Improving capability to cope with surprises Diversity of means to accomplish desired benefits Avoiding high vulnerability Allowing for flexible responses Preparedness for adaptation

Application of conflict resolution methods for reaching consensus or tolerance for risk evaluation results and management option selection

Integration of stakeholder involvement in reaching closure Emphasis on communication and social discourse

Staff members and specialists in the field

Wide range of experts and scientist, including social scientists

Inclusion of major stakeholders such as industry and environmental groups

Wider public, including different social and cultural interests and values

IRGC (2005) White Paper on Risk Governance: Towards an Integrative Framework. Geneva: International Risk Governance Council.

3. Resilience-based strategy. This strategy refers to risk reduction activities that are derived from the 'application of the precautionary principle'. Within this third frame, the concept of risk is seen from the perspective of pervasive uncertainty and in particular ignorance and non-knowledge. Precautious risk management entails to ensure prudent handling of decision options in situations of high uncertainty about causes and effects and of high vulnerability of the ecosystems under risk. Instruments of precaution include minimization requirements such as ALARA (as low as reasonably achievable) or ALARP (as low as reasonably possible), diversification of risk agents, containment in time and space, and close monitoring. It is difficult to draw the line between too much precaution and not enough precaution in the face of uncertainty. How can one judge the severity of a situation when the potential damage and its probability are unknown or highly uncertain? In this dilemma, risk managers are well advised to include the main stakeholders in the evaluation process and ask them to find a consensus on the extra margin of safety in which they would be willing to invest in exchange for avoiding potentially catastrophic consequences.

4. Deliberation-based strategy. This strategy includes 'discursive processes' such as roundtables, consensus conferences, deliberative rule-making, mediation, or citizen panels. This third frame has been advocated as an alternative or an addition to purely analytical procedures of both assessing and managing risks. The task of risk management here is to organize in a structured and effective manner the involvement of stakeholders and interested public for designing risk management strategies based on each stakeholders' knowledge (epistemic community) and value system. This strategy can go along with both the risk analysis and the precautionary approach but has been advocated either as an independent path to risk management or more often as a policy-oriented implementation of the precautionary approach. This third strategy is designed to address problems of ambiguity. For managing these risks, the main groups representing different visions of future development should be consulted and, if possible, a consensus among the main actors accomplished.

Over the last few years, advocates of the these strategies have launched a fierce debate over the pros and cons of each of their approaches. There is generally a common agreement that simple risk problems can be managed using the traditional assessment and risk reduction tools. There is, however, a controversy among the professional communities when it comes to distinguishing between the assessment and the resilience camp. One side argues that precautionary strategies to improve the resilience of ecosystems ignore scientific results and lead to arbitrary regulatory decisions. The precautionary statement ''one should be on the safe side'' could be interpreted as a mandate to ban everything that might result in negative side effects. Such a rule would logically apply to any human intervention into the natural environment and would lead to total arbitrariness. The principle has been labeled to be ill-defined, absolutist, to lead to increased risk-taking, to be a value judgment or an ideology, and to be unscientific or to marginalize the role of science. Some analysts claim that by using the precautionary principle there is the risk that science may be held 'hostage to interest group politics'. In addition, policy makers could abuse the precautionary principle as a policy strategy to protect their economic interests and to impede world trade.

On the other side of the fence, the advocates of the precautionary approach have argued that precaution does not automatically imply banning substances or activities but a step-by-step diffusion of risky activities or interventions until more knowledge and experience is accumulated. They have accused their critics of ignoring the complexity and uncertainty of most human interventions and relying on data that often turns out to be insufficient for making prudent judgments. In particular, the argument is that all interventions characterised by both high uncertainty (when it comes to measuring the degree of impacts) and the generic possibility of inducing irreversible harm should be (strictly) regulated even if more scientific evidence could demonstrate later that the cautious approach was not warranted. It is better to err on the safe side than to impose unforeseen burdens to future generations.

The third approach of deliberation has found wide acceptance among social scientists and risk analysts from academia but so far has had little impact on the institutional design of risk management. There are, however, isolated examples of community participation in risk decisions, such as in selecting the remedy under the Superfund cleanup program or negotiated rulemaking in the US. In recent years, however, risk policymakers have acknowledged that participation in risk analysis provides many practical advantages because it transforms difficult issues of resolving epistemic uncertainty to topics of negotiation that can be dealt with at the negotiation table. If society participates in the production of policy-relevant scientific knowledge, such 'socially robust' knowledge is less likely to be contested than that which is merely reliable. Accordingly, the EU communication on good governance has highlighted the need for more stakeholder involvement and participation in risk management. How to implement this requirement in day-today risk management decision is still under dispute. Many scholars have also questioned the value of deliberative approaches in some settings, arguing that when there is trust in the regulator, a top-down form of risk communication (information transfer) may be better than dialog.

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