Risk and Regulatory Policy How do systems of regulatory governance reduce societal risk? Greg Bounds, Administrator Regulatory Policy Division

Introduction - outline 1.Elements of risk policy 2.Why use risk assessment? 3.Benefits of a risk based approach 4.Problems with risk assessment 5.Conclusions 6.Further work

Elements of risk policy 1.Risk assessment framing and forecasting 2.Risk management action and remedies avoidance, reduction, retention, transfer 3.Risk review critical to effective governance processes 4.Risk communication and consultation creating transparency

Why use risk assessment? 1.Allocation of scarce resources Improving welfare in a zero sum game 2.Costs of the irregular treatment of risk Failure to set priorities Over regulating Unequal treatment Trade barriers 3.Sources of policy problems Interrelated nature of risks Risk and the policy cycle Timing of risk assessment Subjective perceptions of risk Communication with the public

Benefits of a risk based approach 1.More efficient regulatory agencies Allocate limited resources to highest risk 2.Accountability and performance Decision processes reveal sources of success and failure 3.More responsible societies Manage risks at the most effective level of society

Problems with risk assessment 1.Data availability Costly, time consuming and rare. 2.Public criticism Technical complexity Spurious accuracy 3.Failure in the authorising environment Legislative authority and political will Timing and co-ordination issues Ex post evaluation

Conclusion 1.Risk assessment can assist in overcoming regulatory tensions 2.Institutional and practical arrangements Political authority – gatekeeper role Guidance and support Monitoring and review arrangements 3.Government responses to broader risks Lessons from the Canadian proposal

Further work 1.Workshop is timely 2.OECD interest in how Governments are extending risk policy tools? Role of different agents Co-ordination by centralised decision makers Legislative directives Role of the media Obstacles to reform – lessons from other areas 3.Case studies Development of guidance material