How far can Research satisfy the needs of Risk Management?

1. How far can Research satisfy the needs of Risk Management? J.P. Contzen IST, Lisboa May 5, 2004

2. A Model for Risk Management? (1)

3. A Model for Risk Management? (2) • Why did you smile when looking at the cartoon? (if you did smile): • Wrong Technological solutions? • Overestimation of the risk? • Personal choice of skier or public regulation?

4. A Model for Risk Management? (3) • This leads to the analysis of four discussion areas: • Do we need to accelerate the development of new technologies? • How could Research better contribute to Risk Assessment: an improved scientific approach? • Public vs. Private Governance • A new alliance between Regulation and Research

5. New technological developments • A good S&T base exists in most areas for contributing to risk prevention and risk mitigation • Three fields require enhanced efforts: • Better information gathering technologies: early warning, faster diagnostics tools • New self preventing, self mitigating techniques: self repairing materials, machines, systems • Increased attention devoted to dual-use technologies: improve their proliferation resistance, find alternative technologies

6. Scientific approach to Risk Assesment (1) • Current scientific methods still suffer from Laplace’s Demon : linear, deterministic, mono-causal view of the world. A more extensive move to a complex, non-linear chaotic approach is required. Mechanistic models of Society lose individual action in statistical average whereas in a chaotic approach, individual action can have decisive consequences (A.J. Wierzbicki)

7. Scientific approach to Risk Assesment (2) • Predictions have given place to probabilities. « Hard Science does not provide definitive truth but better truth » (Oro Giarini) • Look at small variations in initial conditions and small initial fluctuations, microscopic changes in parameters, discriminate weak signals from noise (AIDS, CJD, Tuberculosis,…)

8. Scientific approach to Risk Assesment (3) • The new methods should privilege a holistic approach looking at overall systems and not just at some parts of them. Too often, the risk is shifted rather than being prevented or mitigated e.g. in sustainability issues: waste management, energy savings, air pollution, water management • The cost/benefit analysis should be refined both in economic and social terms

9. Scientific approach to Risk Assesment (4) • Examples where social costs are neglected: • The irritation of Prince Charles, Duke of Wales, when a local council cut chestnut trees arguing that falling chestnuts might hurt passers-by • Does the cost/benefit analysis of performing an Asteroid Watch justifies its development while medical research on identified threats is still under funded?

10. Scientific approach to Risk Assesment (5) • Cost/benefit analysis is often rudimentary while it is an essential element of any assessment: currently risk reduction gains are purchased at much higher costs than in earlier times, hence the importance of the economic factor. This is one of the weakest features of the recent application of the Precautionary Principle, e.g. in the BSE case. It is an area where wide differences appear in results, e.g. the difficulty for fixing the economic value of a human life (1 Swiss worth 100 Portuguese lives)

11. Scientific approach to Risk Assesment (6) • Options in resource allocation are an essential component in risk management: “Save the Planet and ruin the World” • Is it justified to spend in risk prevention 4.2 M$ for environmental remediation against 50 000$ for transport safety or 20 000$ for health improvement with the equivalent result of one year of human life saved? (Harvard study) • The decision on all these cases is clearly a political one but has the scientific, social and economic background been sufficiently detailed?

12. Public vs. Private Governance (1) • The role of research in risk management requires a prior analysis of the possible governance schemes including the public vs. private responsibility issue • In the industrial age, prevailed “the individualism of risk-calculating merchants [and industrialists], learning from experience, attentive to news, making decisions on a well-judged mix of trust and distrust” (Niklas Luhmann)

13. Public vs. Private Governance (2) • In the post-industrial age, with the emergence of newer risks, a more organized, more collective attitude tends to be favored • Globalization, Connexity (Geoff Mulgan) increase collective risks hard to fight on an individual basis: terrorism, infectious diseases, environmental damage, financial bubbles

14. Public vs. Private Governance (3) • A more collective management of risk implies a strong social cohesion. In certain areas, where major risks are concentrated on a minority of people, solidarity is an issue, especially when widening disparities in wealth emerge. It may lead some categories of people to provide for their own risk management. A private approach in risk management is linked to a certain degree of affluence. The attitude of citizens of German Länder towards health insurance is representative of such correlation as shown in the coming slides

15. Source: STERN, 18/2004, p. 56

16. Source: STERN, 18/2004, p. 56

17. Public Regulation (1) • Is a greater regulatory role of the State compatible with the respect of the individual? Who governs the regulatory process: the public authority under a regime of elected democracy with a delegation of power, or direct democracy with an active participation of the civil society (citizens, pressure groups)? Will one day pilots be chosen by passengers before flight departure? (J.M. Lehn)

18. Public Regulation (2) • Four regulatory styles can be considered (Harry Otway): • Adversarial style: regulations developed in open confrontation, recourse to judicial process, transparency of information • Consensual approach: process based on views of elite groups, evolving to broader consultation

19. Public Regulation (3) • Authoritative style: government negotiates with industry (the risk creating actor) and decides • Corporatist model: involvement of different interest groups that seek to find mutual advantage in collective action • The impact of research differs largely according to the style that is prevailing

20. Regulation and Research (1) • What kind of relation should be established in the future between governments acting as regulatory bodies and the research community? Should they remain closely associated as they did in the past or should they in the future be kept at arms-length? • Two schools of thoughts: William Leiss (Canada) and Arie Rip (Netherlands).

21. Regulation and Research (2) • Arie Rip’s approach: Scientists in advisory positions offer a unique and powerful capital of expertise. «They should provide detailed and specialized research findings but must also have the knowledge skills and understanding to relate these findings to social and political concerns even if this causes a dilemma when their loyalty to those asking advice comes into conflict with the requirements of their scientific profession»

22. Regulation and Research (3) • Arie Rip makes a distinction between scientific knowledge and expert advice, the latter being primarily aimed at offering an orientation at those being advised. «Expert advice must go beyond the truths of scientific knowledge» Experts should become involved in complexities and uncertainties of the world outside their academic circle

23. Regulation and Research (4) • Advisers should have a «feel» for policy issues and political flair (Harvey Brook) • Why moving towards this new practice of expert advice? The answer is the advent of “public arenas” and new political attitudes. • For Arie Rip, expectations from expert advice are based on three myths: • The hard-fact myth • The consensual-objectivity myth • The point-source myth

24. Regulation and Research (5) • When experts are employed full time as in-house advisers, the gap between expectations and actual practice can be bridged more easily thanks to the « political skill » of the adviser and to the trust placed in his or her • This leads to an approach of  «pragmatic rationalism» where experts take account of the social and political impact of their advice • Is this approach a new version of Max Weber’s « Verantwortungsethik »?

25. Regulation and Research (6) • William Leiss’ approach: end of old pattern of regulatory research. New Paradigm: governments manage risk, drawing upon independent scientific bodies for the risk assessment expertise. Strict institutional separation of science and policy, good for both. « Science only useful when true to itself » • This approach means the end of public regulatory research. Previous track record of regulatory research is not the reason for change. Obsolescence of the model is not the result of its failures but is driven by the evolution of the global context

26. Regulation and Research (7) • Failures of regulatory research (BSE in UK, Global Change in several countries) vs. Achievements (CFC’s, toxic chemicals, nuclear safety) • A much more exacting new environment: • Changing capabilities of civil society; end of Science/ Government alliance • Merging of disparate risk issues' domains, complexity • Mounting costs - « risk reduction gains are purchased at much higher costs » - leading to competition for resources allocation

27. Regulation and Research (8) • Humanity has eroded its substantial margin of error in the management of the natural environment. • Vulnerability has increased with the increase of quality and performance of modern technology that leads to a reduction of the margin of error that systems can withstand (Orio Giarini) • William Leiss’ solution for this evolution: forget about doing science in the public sector, concentrate on credible risk management, transfer science capacity to independent bodies, primarily Universities and rely on peer review for quality

28. Regulation and Research (9) • The Leiss option is close to Max Weber’s « Gesinnungsethik ». It looks attractive BUT • Will the needed type of expertise be available in outside academic bodies? Will research become irrelevant to policy needs (Canadian Treasury Board, 1998)? • Will the possible advantage of organizational proximity be lost?

29. Regulation and Research (10) • The debate is open: both options are feasible but William Leiss option should be considered earnestly. It could assist individual risk management or at least individual risk perception. It could be a mean to improve the current low level of credibility of the scientific community in the civil society. The adoption of the option could have a serious impact on future research structures

30. Conclusion • The contribution of research to the sound management of risk in our complex, chaotic Society, remains essential • A fresh look should be given to the research agenda and further targeted technological developments should be pursued • A review of the process for conducting risk-relevant research should be performed with the aim of adapting the research contribution to the evolution of policy-making.