A closer look at risk perception and risk governance Piet Sellke Dialogik and University of Stuttgart ICPS 5th Annual Regulatory Affairs International Symposium March 11th, 2013

Outline Part I: Introduction Part II: Risk Perception and Risk Assessment Part III: Risk Governance: An Integrated Concept Part IV: Conclusions

Part I: Introduction

Deficits in Risk Governance Accountability Lack of Trust Framing Paralysis by Analysis Scope Deficits in Risk Governance Accountability Scarcity of data Inequity Framing – different stakeholders have conflicting views of the issue Scope – a risk perceived as only local may have global consequences (and vice versa) There is a scarcity of data about the risk or people’s perceptions of it or, if data does exist, there is a failure to accept it Transparency – trade-offs are not made explicit and hidden agendas seem to determine the outcome Inequity – decisions allot the risk and benefits unfairly Accountability – decision makers are isolated from the impact of their decision Alienation – people or organisations are ignored (can lead to social mobilisation) (also “Authority knows best”) Lack of trust in the process or the communication channel “Paralysis by analysis” – overly inclusive process leads to inertia Transparency

Policy Dilemma in Risk Management Follow perceptions of the public? Follow advice of professional experts?

Challenge of Risk Governance  Integration of factual, technical knowledge and socio-cultural knowledge into one framework Factual dimension Physically measurable outcomes Risk discussed as a combination of consequences and their probability of occurence Socio-cultural dimension How risks are viewed if values and emotions come into play

Part II: Risk perception and risk assessment

Risk perception (I/II) Human behavior depends on perception, not on facts! Qualitative Risk Characteristics: Risk-related patterns Perceived dread Familiarity with the risk Sensual perceptibility Situation-related patterns Personal controllability Voluntariness Trust in risk management Fair distribution of gains and losses

Risk perception (II/II) Semantic risk patterns Risks posing an immediate threat (large dams, nuclear energy) Risks dealt with as a blow of fate (natural disasters) Risk as challenge to one‘s own strenght (sports) Risk as a gamble (lotteries, stock exchange) Risks as an early indication of insidious danger (food additives, viruses) Stigmatisation of Risk Social amplification of Risk These patterns have functions similar to drawers in a filing cabinet. When faced with a new risk or when obtaining new information about a risk, most people try to file this new information into one of the existing drawers[1]. In addition to the cognitive processing of risk characteristics and risk situations, studies have shown that people tend to stigmatise risk sources that are associated with specific dreadful associations (Kunreuther and Heal 2003). A salient example of stigma is the reaction to products that are deemed to be carcinogenic, although there is often limited, if any, scientific evidence to support this position. The mere suspicion that a substance could cause cancer is often sufficient for generating fear and asking for strict regulatory actions. Stigmatisation leads to a cycle of public outrage and regulatory responses feeding into the process that has been described as social amplification of risk (Kasperson et al. 1988; Kasperson et al. 2003). Stimulated by media reporting, the public’s perception of the risk is often amplified in ways that are difficult to explain if one were focusing on the standard elements of any technical risk assessment – probability and direct losses. The problems associated with risk perception are compounded because of the difficulty individuals have in interpreting low probabilities when making their decisions (Kunreuther et al. 2001). In fact, there is evidence that people may not even want data on the likelihood of an event occurring. If people do not think probabilistically, how do they make their choices? Psychological research has revealed the following patterns of drawing inferences about probabilities and risks Social amplification of risk: Social interactions can heighten or attenuate perceptions of risks Risk behavior is in turn shaped by heightened or attenuated perceptions Behavior patterns generate secondary consequences (e.g. loss of trust, drop in business sales, repercussions on other technologies

Challenges of Risk Assessment Quality of explanatory power depends on the accuracy and validity of (real) predictions Problems in validating risk assessment results Prove of correctly assigned probabilities to a specific outcome difficult Risks with difficult to discern cause-effect relationships Risks with rare effects Risks with effects difficult to interpret Variations in both causes and effects obscuring the results Risk assessment is confronted with three major challenges that can be best described using the terms ‘complexity’, ‘uncertainty’ and ‘ambiguity’. These three challenges are not related to the intrinsic characteristics of hazards or risks themselves but to the state and quality of knowledge available about both hazards and risks. Since risks are mental constructs, the quality of their explanatory power depends on the accuracy and validity of their (real) predictions. Unlike some other scientific constructs, validating the results of risk assessments is particularly difficult because, in theory, one would need to wait indefinitely to prove that the probabilities assigned to a specific outcome were correctly assessed. If the number of predicted events is frequent and the causal chain obvious (as is the case with car accidents), validation is relatively simple and straightforward. If, however, the assessment focuses on risks where cause-effect relationships are difficult to discern, effects are rare and difficult to interpret and variations in both causes and effects are obscuring the results, the validation of the assessment results becomes a major problem. In such instances, assessment procedures are needed to characterise the existing knowledge with respect to complexity, remaining uncertainties and ambiguities (WBGU 2000, 195ff.; Klinke and Renn 2002).

Integration of Risk Assessment and Risk Perception Option 1 (only science): Only scientific concepts of risk can claim inter-subjective validity and applicability (Erroneous) risk perceptions have to be corrected via communication and education Option 2 (only people): No overarching universally applicable quality criterion available in order to evaluate the appropriatness and validty of risk concepts Scientific concepts should compete with concepts of stakeholders and public groups Loss of Public Support Loss of Scientific Expertise

Integration of Risk Assessment and Risk Percpetion Option 3 (science + people): In identifying aspects of concern and worry, all groups of society have the same right to raise them and to bring them to the negotiation table Question of the degree to which these concerns / worries are violated by the risk-bearing activity / events should be primarily answered by experts Integrated Approach

Part II: Risk governance: An integrated concept Taking Control in Pensions Planning 1999 3 May 1999 Part II: Risk governance: An integrated concept Draft 1

CONVENTIONAL RISK MANAGEMENT Deciding Understanding Who needs to know what, when? The knowledge needed for judgements and decisions Management Communication Appraisal Who needs to do what, when? Most risk management processes do not go beyond these steps

IRGC’s RISK GOVERNANCE FRAMEWORK Risk assessment PLUS Concern assessment Getting a broad picture of the risk Deciding Understanding Pre-Assessment Characterisation and Evaluation Appraisal Management Categorising the knowledge about the risk Who needs to do what, when? Communication Communication Who needs to know what, when? Is the risk tolerable, acceptable or unacceptable? Is the risk simple, complex, uncertain or ambiguous?

Taking Control in Pensions Planning 1999 3 May 1999 Phase 1 Pre-Assessment Characterisation and Evaluation Appraisal Management Communication Getting a broad picture of the risk Draft 1

Importance of Framing Looks like a high risk from the outside

Importance of Framing But consider this…

Importance of Framing Or this…

Different regulatory approach NOVELTY AND PRECAUTION: THE IMPACT OF FRAMING ON THE RISK-HANDLING OF GMOs Comparing USA and Europe: Different framing Different regulatory approach In the EU, GM crops were framed as a radical departure from any previous products and were seen as requiring path-breaking regulatory approaches. The US, in line with the OECD approach, framed them as inherently similar to existing products developed through conventional plant breeding programmes and therefore not requiring any additional scrutiny beyond existing regulatory systems, for example for pesticides, food for human consumption or animal feeds (i.e. they were seen as requiring path-dependent and evolutionary regulation).

Taking Control in Pensions Planning 1999 3 May 1999 IMPORTANCE OF FRAMING Frames represent social and cultural perspectives Challenge or problem Opportunity or risk Innovation or intervention Frames determine boundaries of what is included and excluded Time and duration (future generations, sustainability) Location and space (the universe, all nation, Norway, Stavanger) Social class and stratus (vulnerable groups, poor, immigrants) Types of adverse effects (physical, mental, social, cultural) Primary or secondary impacts (ripple effects) Criteria taken into account (risk reduction, cost, benefit, equity, environmental justice, value violations…) Draft 1

Taking Control in Pensions Planning 1999 3 May 1999 Phase 2 Pre-Assessment Is the risk simple, complex, uncertain or ambiguous? Appraisal Management Communication Characterisation and Evaluation Categorising the knowledge about the risk Draft 1

Components of Risk Knowledge Complexity in assessing causal and temporal relationships Uncertainty variation among individual targets measurement and inferential errors genuine stochastic relationships system boundaries and ignorance Ambiguity Interpretative ambiguity (What does it mean?) Normative ambiguity (Is it tolerable?)

RISK APPRAISAL Risk Assessment Concern Assessment Hazard identification and estimation Exposure assessment Risk estimation Concern Assessment Socio-economic impacts Economic benefits Public concerns (stakeholders and individuals)

BRENT SPAR – UNDERESTIMATING STAKHOLDER CONCERN Greenpeace’s campaign included occupation of the platform but did not include calling for a consumer boycott. Nonetheless, Shell is estimated to have lost between £60-100 million, mostly from lost sales across northern Europe; petrol stations were fire-bombed in Germany.

Taking Control in Pensions Planning 1999 3 May 1999 Phase 3 Pre-Assessment Characterisation and Evaluation Appraisal Management Communication Is the risk tolerable, acceptable or unacceptable? Draft 1

Characterization and Evaluation What are the broader, value-based questions to consider? Characterization: What are the societal and economic benefits and risks? Are there impacts on individual or social quality of life? Are there ethical issues to consider? Is there a possibility of substitution? Evaluation: What are possible options for risk compensation or reduction? How can we assign trade-offs between different risk categories and between risks and benefits (or opportunities)? What are the societal values and norms for making judgements about tolerability and acceptability? Do any stakeholders have commitments or other reasons for desiring a particular outcome of the risk governance process?

Evaluation and Characterisation The scientific evidence from the risk assessment is “simple” – civil aviation emits significant pollutants into the atmosphere. Grounding the fleet would stop those emissions. Modern values – particularly economic and societal – are such that no decision has been or is likely to be made to ban civil aviation. In this instance, the policy judgement is therefore to give greater weight to the values than the scientific evidence.

Taking Control in Pensions Planning 1999 3 May 1999 Phase 4 Pre-Assessment Characterisation and Evaluation Appraisal Management Communication Who needs to do what, when? Draft 1

RISK CHARACTERISTICS AND THEIR IMPLICATIONS FOR RISK MANAGEMENT (I/II) Knowledge Characterisation Management Strategy Appropriate Instruments Stakeholder Participation 1 ‘Simple’ risk problems Routine-based: (tolerability / acceptability judgement)  Applying ‘traditional’ decision-making Risk-benefit analysis Risk-risk trade-offs Instrumental discourse (risk reduction) Trial and error Technical standards Economic incentives Education, labelling, information Voluntary agreements 2 Complexity-induced risk problems Risk-informed: (risk agent and causal chain)  Characterising available evidence Expert consensus seeking tools, such as Delphi or consensus conferencing, meta analysis, scenario construction Results fed into routine operation Epistemological discourse Robustness-focussed: (risk absorbing system)  Improving buffer capacity of risk target via: Additional safety factors Redundancy and diversity in designing safety devices Improving coping capacity Establishing high reliability organisations

RISK CHARACTERISTICS AND THEIR IMPLICATIONS FOR RISK MANAGEMENT (II/II) Knowledge Characterisation Management Strategy Appropriate Instruments Stakeholder Participation 3 Uncertainty-induced risk problems Precaution-based: (risk agent)  Using hazard characteristics such as persistence, ubiquity etc. as proxies for risk estimates Tools include: Containment, ALARA, BACT Reflective discourse Resilience-focussed: (risk absorbing system)  Improving capability to cope with surprises Diversity of means to accomplish desired benefits Avoiding high vulnerability Allowing for flexible responses Preparedness for adaptation 4 Ambiguity-induced risk problems Discourse-based:  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 Participative discourse

Taking Control in Pensions Planning 1999 3 May 1999 Complementary Phase Pre-Assessment Characterisation and Evaluation Appraisal Management Communication Who needs to know what, when? Draft 1

Objectives of Risk- Communication Enlightenment: Making people able to understand risks and benefits (and their interactions) Behavioral changes: Making people aware of potential risks and benefits help them to make the right choices Trust building: Assisting risk management agencies to generate and sustain trust Conflict resolution: Assisting risk managers to involve major stakeholders and affected parties to take part in the risk-benefit evaluation

Risk Communication – Essential throughout the process Pre-assessment Informing other agencies and assessing who is affected and who is mandated to take responsibility Inviting views of affected stakeholders Appraisal Requesting and receiving appropriate scientific advice on the risk Requesting and receiving scientific advice on people’s concerns Evaluation Communication of appraisal findings (if they are clear) Involving all affected agencies and stakeholders if risk appraisal findings are uncertain or ambiguous Deliberations concerning values / perspectives and to evaluate trade-offs Management Inclusion of appropriate stakeholders in the decision making process Communication of the decision / regulation / advice

STAKEHOLDER INVOLVEMENT Actors « Civil society » Affected stakeholders Affected stakeholders Scientists/ Researchers Scientists/ Researchers Scientists/ Researchers Agency Staff Agency Staff Agency Staff Agency Staff Type of participation Instrumental Find the most cost-effective way to make the risk acceptable or tolerable Epistemic Use experts to find valid, reliable and relevant knowledge about the risk Reflective Involve all affected stakeholders to collectively decide best way forward Participative Include all actors so as to expose, accept, discuss and resolve differences Dominant risk characteristic Simple Complexity Uncertainty Ambiguity

Taking Control in Pensions Planning 1999 3 May 1999 PART V: Conclusions Draft 1

CONCLUSIONS I Problems in handling risks: Part V: Conclusions CONCLUSIONS I Problems in handling risks: Plural values and knowledge claims Expert dissent on risk and benefits Transboundary nature of risks Social amplification and attenuation via perception and social mobilization Emergence of systemic risk that cross national and sectoral boundaries (ripple effects) Need for integration of risk analysis and perception Communication must be tailored to the risk class

CONCLUSIONS II Four risk management regimes should be used to deal with these new risk challenges: simple risk management: standard risk assessments risk-informed management: expanded risk assessments; seeking expert consensus and epistemological clarification precaution-/resilience-based management: negotiated safety level under uncertainty; seeking stakeholder consensus and relying on containment and resilience discourse-based management: value-based orientation; seeking more public input and stakeholder involvement for interpretative variability and normative controversy

Thank you! sellke@dialogik-expert.de

RISK GOVERNANCE GOES MUCH FURTHER Core Risk Governance Process pre-assessment risk appraisal -- risk assessment -- concern assessment evaluation: tolerability / acceptability judgement risk management communication Organisational Capacity assets skills capabilities Actor Network politicians regulators industry/business NGOs media public at large Social Climate trust in regulatory institutions perceived authority of science degree of civil society involvement Political & Regulatory Culture different regulatory styles

Adequate structure of working groups? Local structures, leading structure? Who is initiating a process as this? What partners does one need?

New Challenge: Systemic Risks Emergence of systemic risks that are... transboundary socially amplified via perception and social mobilisation subject to expert dissent regarding risks and benefits unmanageable by single organizations difficult to communicate