Risk is more than just a number

1995 saw the publication of ‘Not all risks are equal’. This report contained the comments of the Committee on ‘Risk measures and risk assessment’ about the ‘environmental risk management approach’ of the Netherlands Government. In the present report the committee arrives at recommendations for the further development of this policy for the protection of human health and the environment.

The committee argues in favour of an effective and efficient approach based on the nature of particular risk problems. It summarizes the framework it proposes in three sections: ‘risk and the origin of risks’, ‘the process of risk assessment and risk management’ and ‘not all risk problems are equal’.

Risk and the origin of risks

The committee defines risk as the possibility, with a certain degree of probability, of damage to health, environment and goods, in combination with the nature and magnitude of the damage. Risks are ultimately caused by human demands and needs which generate human action. Examples of human action are developing and operating a chemical plant, living below sea level, alcohol drinking, and traveling by car to the place of work. These activities will result in changes in substance and energy flows. This can lead to a situation in which humans and the environment are subjected to stressors (‘exposure’). The effect can be damage or loss involving human health, the environment or goods. The aim of human activities is to produce benefits but the inevitable side-effect is the creation of risks. This is why risks cannot be viewed separately from benefits and it is for this reason that the figure above (see the PDF-file) shows both benefits and possible undesired effects.
When assessing the risks for human and ecological health, it is important to distinguish between activities which proceed as planned and activities which do not do so. This makes it possible to make a further distinction between the risk of (unplanned) accidents and risks of a less incidental nature (e.g. the risks associated with licensed emissions). Finally, the committee asks for attention to be paid to the indirect undesired effects, such as economic damage and employment loss after a serious accident. These are often neglected in risk analyses even though they can be the most important aspect of the risk. These indirect effects are also related to the fact that only limited resources are available for risk management. Resources can be deployed for reducing one risk instead of another. However, the choice for risk reduction competes with deploying the same resources for satisfying other needs instead of health promotion and environmental protection. In risk management one should take into account ‘opportunity costs’, i.e. costs (including risks) that are generated because resources which have been deployed once can no longer be used for other objectives.

The process of risk assessment and risk management

The committee advocates coping with risks by means of a process of risk assessment and risk management. This makes it clear for all those involved when and why a decision has been proposed or taken, and by whom. The terms ‘risk manager’ in the above figure (see the PDF-file) denotes the person or institution that is responsible for deciding on the tolerability of risk and for taking risk reduction measures (in this report the authorities). ‘Risk assessor’ is the person or institution that is commissioned by the risk manager to analyze the risk.
Risk assessment encompasses: problem description, risk analysis and risk characterization. During problem description, the scope and nature of the problem are determined. Social preferences inevitably play a part here. This makes consultations between risk managers and risk assessors necessary with the risk manager expressing the preferences of the parties involved in the risk assessment. The outcome of the risk analysis is a risk estimate, which is expressed in the form of a risk profile. During the risk characterization process, the question arises: which characteristics should be used to represent the risk? This selection process cannot be left to the risk assessor, but requires consultation between the risk manager and the risk assessor. Here again, the risk manager should represent the preferences of the parties involved. Examples of characteristics are: probability of disease or death and reduction of species in ecosystems, but also level of training of industrial operators.
During the risk management stage, a decision is taken about the tolerability of the risk. In the context of this report, that decision is taken by the government. Measures will be taken on the basis of the decision to keep the risk within acceptable limits and the effectiveness of these measures will be monitored.
The committee advocates a dynamic process of risk assessment and management. In the risk assessment stage one may conclude that the scope of the problem is different, usually more extensive, than originally determined. Also one may wish to study alternative risk measures. Parts of the process are than again passed through. Feedback from actual practice my lead to renewed risk estimates and adaptation of risk measures.
The dynamic nature of the risk assessment and management process is also due to external interferences. Parties with a say in the decision making may ask for additional analyses. Also gaps in knowledge and uncertainties in the risk estimates may reinforce the back and forth character of risk assessment and risk management.

Not all risk problems are equal

The committee believes that a number of factors have a considerable influence on the way risk problems are assessed and how decisions are taken about them:

• the scope of the risk in time
• the spatial scope of the risk
• uncertainty in knowledge about the nature and scope of the risk
• the societal importance of the activity which causes the risk.

Together with the jurisdiction of the authority which takes the decisions, these facets determine the status of the problem: is it strategic, tactical or operational? The higher the problem ‘scores’ on one of the four dimensions, the more it shifts from operational to strategic (see the figure in the PDF-file). The status of the problem is not a rigid one: each problem has strategic, tactical and operational aspects. The development of the port of Rotterdam with its industrial operations may be viewed as a strategic problem, the construction of the socalled Betuwe railway-line for the transport of goods to the German hinterland as a tactical choice and noise reducing measures in houses along the railway-line as operational.
Different risk problems require different risk management strategies. The latter will have to be adapted to how risks arise. They are—at least in the case of problems which have arisen previously—set down or referred to in environmental legislation and regulations. The committee points to the necessity—especially in the case of problems of strategic importance—of creating an ‘environment’ in which justice is done to a variety of political views and cultures, i.e. a variety of risk perceptions. This makes fruitful discussion possible between the parties involved before government takes decisions about accepting certain risks and about associated conditions.
In the committee’s view, the main criteria when deciding about the tolerability of risks and about the measures to be taken are (see the PDF-file):

As stated above, the intended benefits of activities play a role in arriving at a decision. A possible problem here is that those involved can differ in their assessments of the social importance of the activity, depending on their vision of society and their position with respect to the activity and the risk (risk-takers, beneficiaries, victims or combinations of the three). This is especially true for strategic questions, as is demonstrated by the discussions on the energy policy and on public transport systems (expansion of Schiphol airport, high speed trains). In the case of risk problems with a marked operational nature, social benefits are often not discussed explicitly since the usefulness of the activities which cause risk is often thought to go without saying.

Risk management

Risks do not come about on their own. An analysis of the cause-effect sequence shows that there are various opportunities for risk management. This summary is limited to the discussion of the ‘quality of the organization’ and ‘priority setting and risk comparison’.

Quality control In effective and efficient risk management, the way activities which cause risk are organized plays a central role: risk management should be a part of a system of quality control. In the case of industrial processes, this system starts ‘on the drawing board’, implies thorough training for employees at the managerial and practical levels and is related to maintenance and to disposal of waste products etc. The feedback mechanism is important: experience in the control system should result in alterations and improvements which should also include risk management measures.
Quality control should also be the motto for government with respect to its involvement in the process of risk assessment and risk management. This leads to an organization of the process that is transparent, appropriate to the nature of the risk problem and grant a central position to information activities and risk communication.
Risk management through quality control and communication are particularly applicable if diversion is an important cause of the risk. Diversion onto other parts of the world or future generations means that risk-takers no longer perceive the possible harmful effects of their activities in those terms: an important motive for risk reduction is lacking. Another diversion mechanism is the one which shifts risks from the individual to the collective; many individuals or bodies believe that they can quite reasonably take the risk on their own but the combined risk can increase to intolerable proportions.

Priority setting and risk comparison How should environmental funds be spent? This is the question faced by the government in tackling the various environmental risk problems which they encounter. There are two problems in priority setting: what do we not do if we deploy the available resources for a particular problem and what risks does that involve? And how do we compare the efforts involved in one problem with those involved in another?
When answering these questions, it can be helpful to make a link between the costs of risk management measures and the level of risk reduction which those measures aim to achieve. The committee recommends that the following risk attributes should be taken into account: reduction in life expectancy and worsening of health, nuisance, negative appreciation of the environment, reduction of biodiversity, reduced functioning of ecosystems and reduction of environmental functions. Comparative risk analysis may provide a solution for the comparison of problems of different kinds. Here, ‘experts’, representatives from social groupings and government officials rank risk problems in consultation.

Different approaches to dissimilar risks

How can government manage risks and take the individual nature of various kinds of problems into account during the process? For matters of a mainly operational nature, the committee proposes choosing between:

• strict standardization
• balancing risk reduction against reduction costs
• self-regulation with requirements for the organization of the activity.

‘Standardization’ includes government decisions about conditions for the acceptance of risks, about the form of risk management measures and about the desired level of risk reduction. An example is setting environment quality objectives on the basis of the Environmental Management Act. The second point relates to the application of the ALARA principle: the reduction of risks to a level that is as low as is reasonably achievable. Risk reduction may also be ‘unreasonable’ if other beneficial activities may not be carried out because of a lack of resources. The third point, self-regulation, can improve the quality of the organization of the activity which causes the risk. At the same time, it imposes stringent demands on the monitoring role of government, to which the ‘self-regulated’ is accountable. Risk communication plays an important role in this respect.
There are no generally-accepted approaches in current Dutch government policy for problems with a less operational, more strategic nature. The committee lists the following possibilities:

• breaking down the problem into parts for which there are acceptable risk management approaches
• taking measures which are on the safe side, particularly if the consequences are irreversible
• searching for measures which stimulate risk reduction (bonuses) or encourage the acceptance of risks (insurance-policies)
• determine the extent to which, and the conditions in which, compensation can play a role in controlling risk distribution which is judged to be unfair.

In problems of major strategic importance, government must initiate and follow procedures which create conditions for good understanding among all those involved of the particular risk problem, of how the different parties approach the problem and of the decision-making criteria which will be followed. Measures will primarily consist of encouraging some developments and discouraging others in order to manage risks without creating excessive obstacles to the functioning of the society. It may be helpful in this respect to classify measures according to the costs of the estimated level of risk reduction on relevant risk attributes. The committee believes that the following points deserve particular attention:

• Strategic problems are complex in nature and generally unique. They cannot therefore be tackled using standard approaches. A failure to recognize the need to look for new approaches—generally a mixture of various tactics—can interfere with efficient risk management. Global climate change is an example.
• All the parties involved can be expected to indicate how the activities which cause the risk advance the public interest. They should also state whether this benefit off-sets the risks and, in particular, how the risk is distributed across the various parties. Each party should clarify which distribution of risk and benefits it considers just.

Strategic risk problems make it necessary to look for new forms of coping with risks: who decides when about the tolerability of what part of the risk and who is responsible for keeping the risk at an acceptable level?

Risk is more than just a number

Risk management questions are questions about the structuring of the society. Opinions about the vulnerability of nature, about concern for future generations and about freedom of action determine the answers. Supplying milk in plastic bottles and the construction of a network of high-speed train tracks are both types of human activities which, in addition to serving meaningful objectives, also threaten human health and the environment. Milk supply and fast trains are, however, different in nature, scope and societal importance and the risks involved cannot therefore be assessed in the same way. The nature and extent of the risk management measures will, in both cases, be different and partly dependent on the importance which groupings in society attach to particular types of milk packaging and to fast trains.
A transparent, orderly approach to risk assessment and risk management can lead to a result which the people involved can live with. In many cases, this requires meticulous analysis, communication and consultations. After all, risk is much more than just a number.