Assessment of Risk

Be wary of the man who urges an action in which he himself incurs no risk.

Joaquin Setanti

Introduction

Technical approaches assume that risk is tied to the technology, that it is associated with the probability of failure of the technology itself. In this sense, technical approaches ask, "How safe is the technology?" Social science approaches view risk as perceptions held about the technology. Risk assessments note that the human enterprises using technology are intrinsically flawed. Knowing that failure will somehow occur, the question thus becomes, "Is the technology safe enough?"

The first social science approach we discuss is the economic one. The economic approach seeks to assign monetary quantification of the costs and benefits of a technology.

The Economic Approach

Characteristics

Risk is measured as expected utility and undesirable events are defined as instances where the costs of a technology outweigh its benefits. Expected utility is the estimated value of the technology in consideration of its use and the costs of its use. From the economic perspective, if estimated benefits outweigh the estimated costs, then the technology has a favorable overall risk assessment. This approach marks a significant departure from technical approaches in that the maximization of satisfaction rather than reduction of physical harm is the desired outcome. In the move from technical to social science risk assessment the central question shifts from, "Is the technology safe?" to "Is the technology safe enough?"

This excerpt from Science for All Americans (J. James Rutherford and Andres Ahlgren, 1990. American Association for the Advancement of Science) describes the key elements of cost-benefit analysis:
    Rarely are technology-related issues simple and one-sided. Relevant technical facts alone, even when known and available (which often they are not), usually do not settle matters entirely in favor of one side or the other. The chances of reaching good personal or collective decisions about technology depend on having information that neither enthusiasts nor skeptics are always ready to volunteer. The long-term interests of society are best served, therefore, by having processes for ensuring that key questions concerning proposals to curtail or introduce technology are raised and that as much relevant knowledge as possible is brought to bear on them. Considering these questions does not ensure that the best decision will always be made, but the failure to raise key questions will almost certainly result in poor decisions. The key questions concerning any proposed new technology should include the following:

    1. What are alternative ways to accomplish the same ends?
    2. What advantages and disadvantages are there to the alternatives?
    3. What trade-offs would be necessary between positive and negative side effects of each?
    4. Who are the main beneficiaries?
    5. Who will receive few or no benefits?
    6. Who will suffer as a result of the proposed new technology?
    7. How long will the benefits last?
    8. Will the technology have other applications? Whom will they benefit?
    9. What will the proposed new technology cost to build and operate? How does that compare to the cost of alternatives?
    10. Will people other than the beneficiaries have to hear the costs?
    11. Who should underwrite the development costs of a proposed new technology?
    12. How will the costs change over time?
    13. What will the social costs be?
    14. What risks are associated with the proposed new technology?
    15. What risks are associated with not using it?
    16. Who will be in greatest danger?
    17. What risk will the technology present to other species of life and to the environment?
    18. In the worst possible case, what trouble could it cause? Who would be held responsible? How could the trouble be undone or limited?
    19. What people, materials, tools, knowledge, and know-how will be needed to build, install, and operate the proposed new technology? Are they available? if not, how will they be obtained, and from where?
    20. What energy sources will be needed for construction or manufacture, and also for operation?
    21. What resources will be needed to maintain, update, and repair the new technology?
    22. What will be done to dispose safely of the new technology's waste materials?
    23. As it becomes obsolete or worn out, how will the technology be replaced?
    24. What will become of the material of which it was made and the people whose jobs depended on it?

    Individual citizens may seldom be in a position to ask or demand answers for these questions on a public level, but their knowledge of the relevance and importance of answers increases the attention given to the questions by private enterprise, interest groups, and public officials. Furthermore, individuals may ask the same questions with regard to their own use of technology (e.g., their own use of efficient household appliances, of substances that contribute to pollution, of foods and fabrics). The cumulative effect of individual decisions can have as great an impact on the large scale use of technology as pressure on public decisions can.

    Not all such questions can be answered readily. Most technological decisions have to be made on the basis of incomplete in-formation, and political factors are likely to have as much influence as technical ones, and sometimes more. But scientists, mathematicians, and engineers have a special role in looking as far ahead and as far afield as is practical to estimate benefits, side effects, and risks. They can also assist by designing adequate detection devices and monitoring techniques, and by setting up procedures for the collection and statistical analysis of relevant data.
Assumptions

The economic approach assumes that costs and benefits can be accurately estimated and agreed upon by all. It assumes that costs and benefits can be measured in economic terms using a common denominator (i.e., money). Also, it assumes that all potential costs and benefits have been anticipated and integrated within the cost/benefit analysis. The economic approach assumes a rational actor; that is, someone who acts entirely upon estimated utilitarian costs and benefits and who has full knowledge of these costs and benefits.

Strengths and Limitations

Evaluating risk as a function of costs and benefits provides a universally understood basis for technology assessment. But realizing the potential usefulness of the economic approach entails overcoming some important limitations:
  1. Cost benefit analysis relies upon estimated costs and benefits, which are subject to the types of observation and measurement errors of technical risk assessments.
  2. Costs and benefits do not necessarily accrue at the same time. Benefits might lag behind costs or costs might lag behind benefits.
  3. It is difficult to place issues of social welfare and perceptions of equity and fairness in terms amenable to cost/benefit analysis.
  4. The assumption of a rational actor rarely holds true in practice. People take into account other issues besides utilitarian ones in making decisions about complex and controversial technologies.
  5. The reliance upon utilitarian contractual exchange poses potential ethical problems for a society. Utilitarian contractual exchange would bring about a situation where the poorest communities would bargain for the most risk (i.e., exchanging risk for cash), meaning that the poorest members of society would bear the most cost for potentially hazardous technologies.
  6. It can be difficult to include in cost-benefit analysis all favorable and unfavorable externalities (i.e., costs and benefits not immediately recognized in the initial evaluation of a technology).
Examples of Use

Cost-benefit analysis provides a valuable tool for understanding what is exchanged for technology risk. By weighing potential benefits against estimated risks, the public is provided with the information needed for rational decision making regarding the level of risk they are willing to tolerate in exchange for potential payoffs from a technology.

This brief paper published by Health and Safety Executive provides a template for cost-benefit analysis of safety measures: Cost Benefit Analysis Checklist.


Application in Context

    What is the cost-benefit analysis of food irradiation?

    This is the most recent information available on the web regarding retail sales of irradiated food:

    1. On May 16, 2000, Huisken Meats, based in Minneapolis, MN, began the first commercial market testing of irradiated food (i.e., frozen beef patties). This initial rollout to 84 groceries quickly expanded to hundreds of stores in Minnesota and other states.
    2. On July 31, 2000, Hawaii Pride began shipping irradiated fruit products to the mainland United States. In May, 1999,
    3. The SureBeam Corporation, a division of Titan Corporation, opened its first irradiation facility. One year later, in cooperation with Huisken Meats, it was shipping irradiated ground beef patties to thousands of groceries in 32 states. By January of 2004, however, SureBeam was out of business due to poor demand for irradiated food (see related article).

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