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TREND REPORT: Clearing the Fog: Changing Perceptions of the Public Regulation of Risk

Simon Booth*

isk can be defined as ’the potential for the R realisation of unwanted consequences from impending events’ (Rowe, 1979). Risks resulting from new technological develop- ments have increased both voluntary and involuntarly risks which are accepted as part of modem industrial life (Sprent, 1988). This report explores recent changes in the way risk is perceived and dealt with, including the ‘lag effect’ of regulations, and suggests that it is increasingly important to see risk from a societal and cultural perspective rather than simply as an individual, technical matter (Williams, 1992; Booth, 1993).

Today, in the USA and Europe, there are basically three ways in which risk is managed according to Lave (1986). First, the market mechanism. Decisions by employers, workers and consumers were the basic mechanism which determined risk levels. An efficient market was seen as one in which no one could be made better off without at least one other person being made worse off. In practice, the market has failed to function as it ideally should do and this has meant that governments have intervened to try to promote efficiency. The problem of externalities, for example, has meant that a role for government in risk management has developed to regulate those areas that the private sector does not or will not control.

Secondly, the legal mechanism. Lave (1986) suggested that the development of a body of law has provided a basic, if inefficient, system for the remedy of grievances and the reduction of risks such as negative externalities. The law of tort provided for the remedy of civil wrongs which were not subject to contract, such as nuisance or negligent acts. The responsibility of enterprises for product liability provided a basic motivation for them to reduce risks. In the USA there have been cases in which the jury may regard the defendent’s ’deep pockets’ as sufficient reason to make an award even though they do not believe the firm’s actions caused the problem (Cave, 1986). In many cases, however, the balance of power was with the party with the greater access to funds and thus the individual attempting to University of Reading

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sue a corporation could have great difficulty. On rare occasions, however, the legal system does take drastic action. The Manville Corporation, for example, became bankrupt after a number of legal suits mainly from employees seeking compensation after exposure to asbestos. The lawsuit took many years and an unknown number of deaths and injuries before action was taken. Manville had been the largest producer of asbestos in the USA and had known about the health problems associated with it for over fifty years, but had denied causal linkages. The doctrine of strict liability has been developed in the USA to take account of the difficulty of proving cause and effect. Lave (1986) outlined the doctine which stated that certain actions or products are considered so inherently dangerous that any resulting damage is considered to be the fault of the manufacturer without need for explicit proof of negligence. All that is required is to show that harm resulted from the untoward event; negligence need not be shown.

Thirdly, the voluntary regulation of risk. Until fairly recently, enterprises were left to devise their own voluntary standards concerning risk. One of the main ways in which risk is voluntarily controlled is through premiums set by insurance companies. In some cases this has been of some significance. In the UK, for example, insurance firms in 1993 influenced the government to increase their contribution as reinsurer of last resort in the case of terrorist bombings on blocks of flats. While individual and corporate premiums increased as the threat increased, government increased the percentage of the potential costs they would cover.

Lave (1986) suggests that there were a variety of options open to enterprises or public sector regulators as to how to go about the effective management of risky activity. He suggested that the different decision frameworks outlined above were helpful in deciding which form of management was likely to be appropriate in any particular case. One form of regulation may be appropriate at one point in time, but another in a few years

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time when more is known about a chemical or activity. In his view, the risk management system needed to be as carefully monitored as the risk itself, to ensure that the management system was up to the task of control.

Risk and regulation: as low as reasonably acceptable?

The first important consequence of incidents such as the Sandoz crisis was the trend initiated in the early 1980s by the European Community (EC) to ensure better systems for controlling the storage of chemicals. In the UK, these regulations were embodied in the Control of lndustrial and Major Accident Hazards (ClMAH) Reguhtions 1984 and under the Health and Safety at Work Act (HASAWA) 1974. By 1990, according to the Health and Safety Executive (HSE), approximately 200 sites in the UK were subject to the regulations concerning major accident hazard provisions. Major UK companies with such sites included British Gas with 31, ICI with 16, Calor Gas with 14 and British Petroleum with 12. By the late 1980s, companies storing potentially toxic or hazardous substances subject to the CIMAH regulations had to be able to demonstrate to the HSE both the safe operation of their site and that their safety management systems were adequate.

Firms were required to devise an on-site emergency plan to cope with accidental leakage of hazardous substances. Local or other statutory authorities were required to prepare off-site plans to cope with the external impact of an accident. There were three principle aims in the development of on-site and off-site emergency plans. The first was to ensure that both the firm and public authorities worked together and were aware of the dangers on site, thus overcoming the problem of lack of knowledge that was at the heart of the Sandoz crisis. Secondly, to ensure that if a worst-case situation occurred, both the firm and public agencies would be able to tackle the problems immediately and in an integrated fashion. Thirdly, individuals that could be affected by an incident should be informed not just of the nature of any possible danger, but also of what they should do to protect themselves.

Regulatory weaknesses

It can be suggested that there are significant weaknesses in this system. Five major points can be identified which might lead one to be concerned about the regulation of risk

embodied in the EC directives. The first weakness is the lack of

consideration of the possibility of unexpected non-functioning of safety procedures. In virtually all of the cases considered to have been critical in developing the need for EC regulations, safety systems were ineffective or did not operate at the right time in the correct way. In the case of planning for off-site emergencies, authorities take a closed system approach. In other words they assume that safety systems function as they should according to the regulations. The off-site emergency plans, for example, are detailed and comprehensive and if everything went according to the plan the incident that they had prepared for could be controlled. The Sandoz incident and the Piper Alpha case provide examples of how reality faults the best laid plans. As a consequence, there is a need to take into account the failure of safety systems as part of the planning process.

The second weakness is the failure to take into account potential secondary crises. In the case of Sandoz, for example, the initial crisis of the fire was not actually as important as the secondary crisis of the pollution of the River Rhine. The point is that crises have a habit of throwing up secondary crises which have not been considered. In order to develop sensitivity in understanding possible secondary crises and build these in to present systems there would need to be a change in the concept of ’worst-likely’ incident.

‘The third weakness of the present system is that off-site plans only have to be made for medium and large size storage facilities. Yet it can be argued that the danger of pollution and systems failure is far greater from the smaller sites than from those sites controlled by large companies using large storage facilities and who have personnel adequately trained to look after the sites. The smallest sites do not come under the CIMAH regulations and, although they must provide a safety case to the Health and Safety Executive, they do not need to have fully worked out on-site and off-site plans.

The fourth weakness of the present system is that the principle of the polluter pays is still not fully adopted. There is no doubt that the regulation of hazardous activities has improved since the mid-1980s in response to chemical and technological accidents, but still the tendency is to avoid prosecution in all but the most serious cases.

The fifth, and most important, weakness concerns the definition of a worst-likely event. The HSE takes the view that only events which are reasonably foreseeable should be considered for off-site planning purposes. This

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approach, according to Perrow (1984) is fundamentally flawed if it does not take into account the consequences of the link between tightly-coupled systems and complexity. In such systems, small errors can lead to catastrophic breakdown. Perrow (1984) would argue that unexpected events should be considered when evaluating the possible nature of an incident or crisis.

For example, there are a number of sites in London where there are storage facilities for potentially hazardous substances. For each of those that come under the CIMAH regulations, an off-site plan has been devised. The debate about what constitutes the worst likely event would be a matter of debate and agreement between the firm and the public agency concerned. From the company point of view its interest is to provide for reasonable safety. Public officials, however, might wish to consider more remote possibilities.

In a specific case of a chlorine plant within seven miles of the centre of Eondon, for example, the firm claimed that the worst possible case was the rupture of a chlorine gas line. They argued that this could, at most, lead to the release of chlorine for a maximum of 20 minutes before any counter-action was taken. This view was accepted and a technical plan was devised which included warning 850 people of a possible danger within the three mile downwind footprint.

Instead of taking a closed system company view, an open systems perspective would take into account not just possible technical ruptures but also other incidents such as terrorist bombing. The IRA, for example, began a bombing campaign in 1992, hitting at ’soft’ targets, such as the Baltic Exchange in the City of London, road junctions, such as the southern end of the M1 and shopping centres in mainland Britain. In the USA, a terrorist bomb damaged parts of the World Trade Centre in early 1993. The dangers of an explosion at a soft target such as a chemical or gas plant in or near a centre of population would be something that public officials would be most concerned to avoid, precisely because the results could be very significant. Indeed, precisely this type of incident did occur at Warrington in early 1993.

Considering a worst-case scenario using an open systems perspective for the chlorine plant in London, a quite different worst-case can be identified than the worst-case that has been planned for. The storage facility itself could be blown up. 90 tons of chlorine could be released into the atmosphere. This would lead to the need for a quite different scenario for the off-site plan. Instead of 850 people being affected, well in excess of 100,000 would

be affected within minutes and, given unfavourable wind conditions, hundreds of thousands of people in London could be adversely affected. These negative effects of what may seem a ‘Doomsday syndrome’ are derived from a study on a similar plant carried out in the United States (Abrams, 1989). In this report it was considered that the release of 90 tons of chlorine into the atmosphere could lead to a chlorine cloud travelling as far as 26 miles from the spill site while retaining its toxicity (in excess of 2.5 parts per million). If one imagined something like this happening in London, the consequences would be devastating. Yet, because of the nature of the term ’worst-likely event’ and the need to agree to that with the firm involved, such possible incidents have not even been considered by the regulatory authorities in the UK.

Risk as a social and cultural construct

The rational view that individuals assess risk and make independent judgements based on their rational analysis has come under severe criticism. It can be suggested that risk is an ineluctably social construct. Wartofsky (1986) felt that what individuals saw as risk depended on a system of socially constructed values within which assessments could be made. Douglas and Wildavsky (1982) went one step further and suggested that risk was perceived differently, dependent on what socio-cultural group individuals belonged to. They suggested that individuals who were part of the establishment would probably take a different view of risk to those on the margins of society. They suggested that between private, subjective perception and public, physical science there lies culture; a middle area of shared belief and values. A technical concept of risk that failed to recognise the importance of this cultural dimension could lead to the danger of ignoring the essential complexity and relativism of the concept. They suggested that what determined choices of one rather than another risk was determined by an individual’s commitment to the social structure.

If this is the case then risk analysis is not just a technical matter. The issues raised by Douglas and Wildavsky (1982) have immediate relevance to individuals and their life chances. I t is clear that different societies and governments take different views about what are reasonable risks. If Douglas and Wildavsky (1982) are right then it is quite possible that the ‘centre’ might make critical decisions against the perceived interests of those directly affected.

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MacLean (1986), for example, has shown how what are often seen as purely technical arguments by central decisions makers may have critical consequences for all citizens. He accepted the view that government was made legitimate by the consent of the governed but went on to raise questions about what consent meant when decisions were being made without consultation about what risks were acceptable. He agreed that individuals could not make decisions for themselves about every risk they faced in daily life. So they invested in government the authority to make decisions on their behalf, on the assumption that their interests would be protected. He suggested that there were three main reasons why such critical decisions needed to be centralised.

First, negative economic externalities. The negative effects of economic activity might affect a number of individuals who were isolated and uncoordinated. In many circumstances, individuals could only control risks by combining together. Government has a role on behalf of individuals and groups to regulate negative externalities such as air pollution, exhaust emissions and the dumping of waste.

Secondly, the problem of scientific analysis. Individuals had neither the time, energy, skill or resources to accurately assess the variety of dangers in society. Effective scientific analysis of the nature of the affects of economic or other activity was only possible by government acting on behalf of society.

Thirdly, self interest versus public interest. Because individuals would inevitably disagree about what level of risk was acceptable, government has a role of representing the public interest as opposed to individual or group self interest. As a result, issues of technology, safety and risk would, of necessity, be on the central political agenda.

The result of such an argument, however, was that decisions could be made centrally which might put certain individuals at risk of death or injury. In these circumstances could there be any legitimacy for those bodies charged with making decisions? MacLean (1986) suggested that this was a form of the traditional problem of the relationship between authority and consent. Why, unless the choice were unanimous, should the minority have ever agreed to accept the decision of the majority? What right have the hundred who desire a master to vote for the ten who do not (Rousseau, 1968)?

In this light, the argument may be thought to be the same for public decisions about any risky activity, be it decisions about war and peace at one extreme or contamination of the food chain at the other. In both cases

individuals could be at risk even though they had no knowledge about the nature and degree of the risk.

The cultural ladder of risk perception

For MacLean (1986), the analysis and estimation of risk is rarely a simple matter of fact. Reliance on science is necessary but it is an illusion to think that one can find some haven of scientific neutrality where one can avoid difficult moral and social judgements. For example, there is disagreement about whether the effects of passive smoking should be included in an estimate of the risks involved in smoking; in particular, the issue of protection for individuals who had no control over such risks, such as the unborn babies of mothers who smoked. Normative judgements in such cases need to be made and as such become open to criticism. From this one can develop an understanding of the trade offs that individuals, groups and societies make when assessing risk in its cultural context.

Commercial organizations tend to take a narrow and limited view of risk estimation concentrating on direct economic and measurable risks (Boyadjian and Warren, 1987). Public regulatory agencies tend to take a wider and more comprehensive view. Individual citizens take one of a number of different approaches ranging from the moralistic to the instrumental.

If risk analysis cannot be value neutral then the issue of social consent must be addressed in order to ensure that those making final judgements retain legitimacy. Individuals might give consent to the imposition of a risk on the basis that full information on the nature and degree of the risk was provided. In the past, and in the present, full and accurate information on the nature of the risk is not possible. In everyday life individuals accept tacitly a large number of risks. As a result it could be suggested that in practice an indirect consent model based on an assumption of what is an ambient risk is tacitly accepted.

Such an approach is, however, highly tendentious. Some risk analysts, for example, look at labour markets and the wages demanded by workers in exchange for hazardous work as a measure of tacitly accepted risk. MacLean (1986), however, has pointed out that this indirect consent model depends on highly controversial assumptions. The first is that market behaviour constituted an example of free and informed consent to risk. This assumption is erroneous because many individuals do not have full knowledge or freedom of choice as to where to work. The

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second assumption is that individuals base their decisions on rational criteria. This notion is undermined by the realisation that the rationality that is used may not be a simple estimation of the risks of working in a hazardous environment, but rather the reality that no other job is available and the need to feed the family. Such decisions made under any form of constraint could not provide a reasonable basis for the construction of indicators for an indirect consent model. There are, therefore, significant difficulties in using a notion of indirect consent to justify the acceptability of risks.

Where no direct or indirect consent can be clearly identified other methods of decision may be used. The concept of efficiency could be used; that a decision is best because it is the cheapest way of getting to the goal from the point of view of society as a whole. This is essentially a utilitarian argument and does not lend itself to providing social consent or legitimacy. MacLean (1986) argued that a rational person would be Concerned to make decisions on the basis of the best risk analysis that was possible, but in combination with a notion of social values in which the valuing of human life might require inefficient programmes in order to give public and symbolic expression to concern for individual human life.

More recently some authors have disagreed and suggest, in contrast, that because of the conflicting values and interests of the groups and individuals concerned, no tacit concept of social consent is ethically possible (Jackson and Carter, 1992). To assume any other position would be to endanger the whole notion of social consent which depends on individual rights being protected. The danger of a legitimation crisis (Habermas, 1973; Thompson and Held, 1982) could occur in societies where one set of decision makers made decisions without consultation over value-laden risk management issues. For such writers the technical approach to risk depends on perception and, as such, it is the perceptual question that demands attention. In the reality of risk this view is confirmed by evidence such as the Warrington local authority decision to set up camera surveillance systems at a cost of over €300,000 in an attempt to reassure the public whose perception of vulnerability did not conform to the safety authority’s definition of worst-likely event. The consequence of adopting this approach is that individuals, communities or states that are willing to pay to reduce risks, create an inegalitarian situation in which those who are unable or unwilling to pay have a higher than necessary risk. This could lead to a ladder of risk which is

dependent on wealth more than a notion of social justice (Rawls, 1971).

In controlling or managing risks it can be argued that organizations need to be able to idenbfy not only the best decision systems and evaluation techniques but also how they relate to other organizations, including regulatory public bodies and the media and how the question of the perception of risk can be integrated with current technical assessments. In this way risks might be distributed on a more ethical basis (Donaldson, 1989).

A key issue public policy makers will have to address in the 1990s is the way in which the perception and control of risk is coordinated across national boundaries (Williams, 1992). If Douglas and Wildavsky (1982) are correct, there will be fresh debates over the appropriate value systems and cultural frameworks to be used in determining risk valence between groups, corporate entities and individuals in different countries. The impacts of some international disasters are already raising some of these issues. The blowing up of oil wells in Kuwait, for example, necessitated an international response. Facts had to be identified, emergency actions taken and toxicological studies needed to be carried out. The role of international bodies was vital in tackling what could have been a global disaster. This very activity, however, raised the consciousness of some groups, for example women, both within Kuwait and inter- nationally to the awareness that they had a voice and that they could make that voice heard. In this way the activity of dealing with crisis may lead itself to a fresh perception of the nature of risk.

The main issue to be addressed by the international community is to establish what sort of coordination is necessary and how international coordination can be achieved. It is increasingly bizarre, for example, to have different standards of safety in the oil fields in the North Sea (Forland, 1992). What can be suggested is that, at present, the system for public regulation is shrouded in a national fog which lags behind technology and the increasing reality of a borderless world. An international approach might contribute to clearing this fog. As a result the public would have a greater understanding of the basis of risk assessment and the nature of the judgements made in their name by both national and international agencies.

References

Abrams, R . (1989), New York Under a Cloud, State of New York. New York.

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Booth, S. (1993), Crisis Management Strategy, Routledge, London.

Boyadjian, H. and Warren, J. (1987), Risks: Reading Corporate Signals, Wiley, Chichester.

Donaldson, J. (1989), Key Issues in Business Ethics, Academy Press, London.

Douglas, M. and Wildavsky, A. (1982), Risk and Culture, University of California Press, Berkeley.

Forland, A. (1992), 'Simulation of Evacuation, Escape and Rescue', Major Hazards Onshore and Offshore, Institute of Chemical Engineers, Symposium Series Number 130, Hemisphere Publishing Corporation, London, pp. 679-688.

Habermas, J. (1973), Legitimation Crisis, Beacon Press, Boston.

Jackson, N. and Carter, P. (1992), 'The Perception of Risk', in Ansell, J. and Wharton, F. (Eds), Risk Analysis, Assessment and Management, Wiley, Chichester, pp. 41-54.

Lave, L. (1986), 'Approaches to Risk Management', in Covello, V.T., Menkes, J. and Mumpower, J.L. (Eds), Risk Evaluation and Management, Plenum Press, New York, pp. 461-488.

MacLean, D. (1986), 'Consent and the Justification of Risk Analysis', in Covello, V.T., Menkes, J. and Mumpower, J.L. (Eds), Risk Evaluation and Management, Plenum Press, New York, pp.

489-500. Perrow, C. (1984), Normal Accidents: Living with

High-Risk Technologies, Basic Books, New York. Rawls, J. (1971), A Theory of Justice, Oxford

University Press, London. Rousseau, J.J. (1968), The Social Contract, (translated

by M. Cranston), Penguin, Harmondsworth. Rowe, W.D. (1979), 'Introduction to Risk

Assessment', in Goodman, G.T. and Rowe, W.D. (Eds), Energy Risk Management, Academic Press, London, pp. 7-20.

Sprent, P. (1988), Taking Risks: The Science of Uncertainty, Penguin, Harmondsworth.

Thompson, J. and Held, D. (Eds.) (1982), Habermas: Critical Debates, MacmiUan, London.

Wartofsky, M.W. (1986), 'Risk, Relativism and Rationality', in Covello, V.T., Menkes, J. and Mumpower, J.L. (Eds), Risk Evaluation and Management, Plenum Press, New York, pp.

Williams, A. (1992), 'Major Hazards: The Development of European and UK Legislation over 20 years', Major Hazards Onshore and Offshore, Institute of Chemical Engineers, Symposium Series Number 130, Hemisphere Publishing Corporation, London, pp. 15-26.

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