- Do not use invidious comparisons between your views and anyone else’s.
- Avoid either explicit or implicit ‘fights’ with those holding opposing views.
- Maintain a tone of sweet reasonableness throughout any document.
- Admit that there is some risk (where scientifically appropriate).
- Use some technical terminology to make your explanations understandable, but always give brief explanations in nontechnical language (exposure, dose, likelihood, etc.).
- Be bold in asserting that the only reasonable basis for understanding risks is the accumulated weight of scientific evidence, not single published studies, older studies that have been superseded by newer ones, or outlier studies. Say something like: “We strongly recommend that people do not rely on the other types of studies mentioned” [i.e., single published studies, etc.]
- Be bold in recommending to the public that they exercise caution when making up their minds as to what to believe about any risk, including asking themselves what is the source of any piece of information which they have read or heard about from a friend, and whether that source is likely to have the expertise needed to make a reliable judgment on the risk in question.
- Don’t hesitate to advise your audience that, if it is possible for them to do so, it is fine to seek to minimize personal risks (usually by limiting exposure) when it is relatively easy to do so and does not otherwise inadvertently create or increase another risk.
- It is perfectly acceptable to advise people who are preoccupied with certain risks that alternatives they might choose almost always carry their own risks, sometimes higher ones.
- Brevity is the soul of communicative effectiveness when it comes to key messages.
A lecture at the Risk@Humanities Conference, 26-27 October 2012 By William Leiss Senior Invited Fellow (Fall 2012) Society for the Humanities, Cornell University email@example.com
“Embracing Risk, Manipulating Chance: Will it all End Well?”
Risk@Humanities Conference, 26-27 October 2012
Senior Invited Fellow (Fall 2012)
Society for the Humanities, Cornell University
From the Domination of Nature to Risk.
My doctoral thesis in philosophy at the University of California, San Diego, completed in 1969, was the last act of my decade-long apprenticeship with Herbert Marcuse. It later became my first book, entitled The Domination of Nature (first published in 1972, and, I am pleased to say, still today in print). At the end of my thesis oral, my supervisor announced that I was being awarded my degree for the single sentence that concluded the thesis, where I had reversed a famous Hegelian maxim, “the cunning of reason.”
[Hegel was fond of metaphors, and my favorite is, “The Owl of Minerva takes flight at dusk.” What he meant was, we can only truly understand a historical epoch after it is over, when the life has gone out of it.]
Using a history-of-ideas approach, to which I had been introduced at the graduate program of that name at Brandeis University, I traced the development of the idea that humanity seeks to master or “conquer” nature through the progress of the modern sciences of nature and its technological applications. Arising in the Renaissance, this idea was given its definitive formulation in the writings of Francis Bacon during the first quarter of the seventeenth century.
The eighteenth-century French Enlightenment thinkers took further Bacon’s inspired vision, as expressed best in Condorcet’s masterpiece, Sketch for a Historical Picture of the Progress of the Human Spirit (1795), a profound humanist tract written while its author was in hiding from the Terror. Condorcet, himself both a great mathematician and a social progressive, and a colleague of Lavoisier, the “father of chemistry,” recognized the import of the natural sciences in promising an end to grinding poverty through economic progress; but he also championed the role of the sciences in dispelling the hold of ignorance and superstition over the human mind, through which regressive social practices and institutions were maintained. Condorcet saw the internal connection between the applications of what we would today call “evidence-based reasoning” in both a mastery over the powers of external nature and a growing self-mastery over human social behaviors.
With the help of an extraordinarily perceptive one-liner written by Walter Benjamin, about the need to achieve mastery over the mastery of nature, I identified a potential internal contradiction in this grand historical adventure. For the species which seeks to master “external” nature – the physical environment, its resources and “powers” – has failed miserably so far to achieve self-mastery of its own nature.
The mastery over external nature takes the form of discovering an endless series of new powers and characteristics within nature that are turned through technologies into potent new capacities for action in the world. These new technological powers are placed at the service of a species still riven by atavistic hatreds and ancient superstitions, where the rivalries among national and social groupings threaten to break out into unrestrained mayhem at any time. If you will allow me to refer to just a single image to illustrate what I mean, think of the nation of Iran, the locus of one of the oldest continuous stories in human civilization, whose President rehearses apocalyptic religious fantasies in his speeches before the United Nations, while back in his homeland, in thousands of highly-sophisticated spinning centrifuges, hidden deep underground, uranium oxide is being enriched so that either nuclear energy plants, or nuclear bombs, or both, can be supplied. Lest I be misunderstood here, I hasten to add that the Iranian mullahs have no monopoly on this juxtaposition of scientific modernism and atavistic motivation.
In his phrase the cunning of reason, Hegel alluded to the notion that the impulse of rationalism can work “behind the backs” of historical actors, bringing into being forms of progressive thought through a developmental process of which those actors would remain blissfully unaware. In my reversal, looking at mastery of nature through the lens of “the cunning of unreason,” I imagined that the hidden drivers of history might work in the opposite direction as well, supplying irrationalistic impulses with the requisite means to pursue truly cataclysmic destructive goals using the products of rationalism’s glory, modern science and technology. The point was not lost on the philosopher whose closest colleagues had produced the work entitled Dialectic of Enlightenment (see further Leiss 2011).
As for my own perspective, I regard the spirit of “enlightenment,” along with the modern natural sciences through which it is enabled, as the defining characteristic of modernity. And I believe that the fate of both – Enlightenment and modernity – hangs in the balance today. But I will not pursue this theme further here; if it interests you, you might take a look at a book of mine entitled The Priesthood of Science.
Instead I want to focus now on the story of risk, and try to demonstrate to you that it is the same story under a different name. In a nutshell, risk management is the applied version of the mastery of nature. It is the practical dimension of the great adventure I have referred to, the attempt to increase human welfare by, first, understanding how nature “works,” and then, using technologies to change the odds in our favor with respect to the contest of our species with natural forces.
Embracing Risk, Controlling Chance.
Risk – simply put, the chance of harm – is everywhere. For every moment of existence, for every individual, family, community, nation, and for the world as a whole, the chance that some type of harm might strike unexpectedly is ever-present. One-third of all first heart attacks are fatal and occur with no prior warning; global financial catastrophe appeared without warning, like a mighty flash of lightning, in mid-September 2008; and on average once every hundred-million years during our planet’s history, a massive asteroid, arriving seemingly out of nowhere, has wreaked havoc on our planet.
There is an almost infinite array of diverse types of harms. This has always been true. What is relatively new is describing the imminence of potential harm as a “risk.” To call something a risk means that we understand the threat in a quite specific way, namely, as a source of potential harm that is (except in relatively few cases) which is potentially controllable by our conscious acts. So the understanding of our environment as a source of multitudinous risks is not, as some believe, an expression of a pervasive, debilitating fear and unease about existence (Beck 1992). The truth is exactly the opposite: A risk-based understanding of the world implies, not a dread of uncontrollable forces but rather a confidence that a much higher proportion of our life-outcomes is amenable to rational control than was ever the case in the past.
For example, for women in pre-modern times pregnancy and childbirth were usually the leading causes of premature mortality (women then experienced in addition, with all others of their species, the additional scourges of accidents, rape, famine, disease, war, violence, plunder and dozens of other calamities). All of them were experienced as simple fate and happenstance, to be endured and outlasted if possible but not to be avoided. Explanations for them were most commonly found in the deeds of supernatural entities – spirits, benevolent or otherwise – acting directly upon events or using human agents as their surrogates. [How very far we have advanced since then! If only we could figure out whether God really intends rape to be a good opportunity for creating human life on earth.]
The systematic idea that harms have causes rooted in the characteristics of natural and social systems, and that no supernatural entities are complicit in them, is the product of the Enlightenment of the modern West. From its earliest beginnings this “simple” idea was both a theory (seeking confirmation through experimental evidence) and a program of action (seeking changes to existing practices and institutions). Harms with natural causes, such as diseases, would be amenable to reduction through the discoveries of the new sciences of nature, first chemistry and later physics and biology. Harms with social causes, such as criminality or the gross injustices of the legal and penal systems, would be amenable to reduction through reforms to political institutions and improved insight into the determinants of human behaviors.
The champions of the eighteenth-century French Enlightenment, building on the passions of their revered predecessor, the English Lord Chancellor Francis Bacon, sought to replace fate with a chain of causation that was open to rational analysis and the gathering of evidence. Changing the prior conditions would alter the ultimate outcomes in predictable ways for the “betterment of the human condition.”
So the first radical idea in the new natural philosophy was to see life-outcomes as resulting neither from unalterable fate nor the intervention of supernatural agents, but rather from conditions that could be understood and potentially manipulated to our benefit. The second radical insight was to see that, collectively, such outcomes were distributed across a range of specific end-points (such as average age of mortality in a population) which could be represented as probabilities.
The second was at least as important as the first, because it meant that one could take a strategic approach to the matter even if the pattern of outcomes itself could not be influenced. The best example is insurance, and indeed commercial marine insurance was one of the first applications of the risk-based approach (see generally Bernstein 1996). Following a risk-sharing strategy, and accumulating enough reliable evidence about the chance of a ship’s cargo being lost at sea from a variety of causes, such as bad weather or piracy, meant being able to set appropriate levels of premiums for insured losses. Assembling accurate national mortality tables meant that Scottish churches could determine the premiums needed to establish the necessary financial reserves for providing family support to the widows of ministers – which is why there exists, still today, a life-insurance company in the UK with the name “Scottish Widows.” And a momentous breakthrough known as “Bayes’ Rule” (after an eighteenth-century English clergyman and mathematician), showed how to deal with the uncertainties that bedevil risk: in the face of inadequate knowledge, take a guess about what is the case, and then ask yourself what evidence you could look for that would increase the likelihood of your being right about it, and keep repeating the exercise to increase your confidence level in the result.
These straightforward examples from the early modern period illustrate the simple truth that the risk-based approach represents not an exacerbation of existential fear but rather the rational hope that either the nature of the outcomes themselves, or just their consequences (that is, losses of various kinds), or both, can be controlled to some extent. In almost all cases the objective of risk management is not to abolish the sources of harms but to limit the adverse consequences of our exposure to them, especially to help us to avoid catastrophic losses, that is, losses so great that it is difficult or impossible for us to recover from the encounter and rebuild our fortunes.
Being able to represent a type of harm accurately as a risk, therefore, means knowing how to manage our encounter with it in such a way that losses are minimized and gains are maximized. According to a well-known aphorism, we can only manage something if we can measure it, because we only know if our management is successful by examining the results we get for our expenditure of time and resources. The metamorphosis of harm into risk – for risk is measurable harm – is the key step in our ability to take control of important aspects of our continuous encounter with our environment, including our genetic inheritance, rather than to submit meekly to fate and chance.
Paradoxically, the steady growth of scientific knowledge about natural and social systems magnifies the number of risks we face, because it turns mysterious harms into known risks. This is a simple function of having an increasingly sophisticated and precise picture of underlying cause-and-effect relations and also of developing advanced technological tools for risk control, which inevitably introduce new risks of their own. The overriding idea is that the substitution of risks for harms will yield very substantial net benefits – in terms of longevity, better mental and physical health throughout life (with all of the associated benefits that good health brings), less pain and suffering, and the capacity to recover well from serious adverse events.
Thus the modern world is indeed riskier than was the past: But the right conclusion to draw from this truth is that this greater riskiness is a good thing, because it follows that the scope of our potential control options over life-outcomes has been enlarged.
I emphasize the word “potential” because both harms and risks are tricky in nature and the cause-effect relations underlying them can be subtle and hard to detect. The long latency of some diseases, such as smoking-related lung cancer, and the even longer timelines of environmental risks, especially climate change, allows us to deny the potential for substantial harm, if we are so inclined to do. Moreover, we are always exposed simultaneously to many different types of potentially harmful agents, and sorting out the dominant causative factors is onerous. As a result, risk management is almost always a difficult business and requires the application of a methodical and highly-disciplined analytical paradigm.
Essentials of the Risk Management Paradigm.
Risk management, simply stated, is the attempt to anticipate and prevent or mitigate harms that may be avoidable. Its essential steps are foresight (using risk estimation), precaution (spending some money in advance, such as purchasing insurance), and prudence (seeking to avoid, not all losses, but catastrophic losses, that is, being wiped out, from which future recovery is difficult and sometimes impossible). Since risk management is also, by definition, decision-making under uncertainty, when we take precautionary steps we cannot know whether we are wasting our money – but at least we can be reasonably certain that we have protected ourselves from catastrophic loss.
Thus, for example, we have an insurance scheme to protect people from losing most or all of their money in case their own bank fails, something that did not exist in the early 1930s, when many people lost all their savings, reducing consumption and helping to sink the economy into the Great Depression. It costs society remarkably little to maintain such a scheme.
All risk management costs money, either because some opportunities for individual gain must be renounced or because corrective risk control measures (such as regulations) demand new expenditures, or both. Thus risk management initiatives usually encounter determined resistance from entrenched economic interests, and attacks on the scientific and statistical calculations supporting a newly-measured risk are commonplace. From resistance to the earliest regulatory measures in food safety and workplace hazards, over a century ago, to the fifty-year battle waged by the tobacco industry against the epidemiology of smoking-related diseases, to today’s fierce opposition to effective regulatory control over systemic financial risk by the banking industry, to the sowing of doubt about climate science, any major initiative in risk control can expect opposition from powerful interest groups.
Nevertheless the general reach of risk management in modern society expands steadily. Both professional risk managers and ordinary citizens have ready access to information and analytical tools that, when properly deployed, allow them to modulate their exposure to harms and to incur reasonable costs to achieve targeted levels of risk control. There are literally hundreds of cases where reliable information exists, easily-accessible, that you can use to improve your chances for yourself and your children – because something like 75% of our lifetime health outcomes are dependent, at least in part, on the “lifestyle” choices we make in terms of such risk factors as diet, exercise, alcohol and drug intake, and so on.
Yet here we come to the first in a series of paradoxes in risk management; this one I call the paradox of too much information. Let me give you a couple of examples, the first from the area of blood safety. Relevant information includes the risk estimate in Canada, at present, for the chance that one person will be infected with HIV, in any year, from a unit of donated blood. The answer: 1 in 8 million donations (ten years of donations). The bottom line is, since almost certainly blood has never been safer than it is now, don’t worry about it. But if you insist on more information, I could tell you that, at the 95% confidence level, the uncertainty range varies from 1 in 3 million to 1 in 20 million (Leiss et al. 2008, Appendix: What is Risk Estimation?). You ask: What does that mean? The answer is, technically, that we are a lot more confident that the risk is somewhere between those two outer bounds, than we are that it is exactly 1 in 8 million. Then you might conclude, “Well, that says to me that you don’t really know what the risk is, right? So, I’ll make up my own mind.”
Or take the case of the HPV [human pappilomavirus] vaccine, which can prevent cervical cancer for women. You can take your advice from the CDC in Atlanta, which will tell you that the vaccine itself is “safe.” Does this mean that there are no side effects? No, but the bottom line is, “don’t worry about it.” Or you can go on the Internet, and find a huge stash of anecdotal evidence, including many pictures and videos, about individual (alleged) cases of serious adverse reactions, including paralysis and death. What would you like to believe? Have you heard of “confirmation bias,” an area of research where it has been shown that many people structure their information search in order to find support for their prior belief? [See the PBS Frontline program, “The Vaccine War,” broadcast April 27, 2010.]
Here’s another paradox. Our increasing sophistication about risk control induces in some players a propensity to deliberately seek higher levels of risk. Some people who know that ABS systems in their cars increase driving safety tend to drive faster. Practitioners of “extreme sports” react to safety enhancements in equipment and techniques by pursuing exotic alternatives, such as skiing out of bounds at resorts where the ski runs have been evaluated by professionals. Undersea drilling for hydrocarbons extends into far deeper waters and more fragile environments, such as the Arctic, where existing safety protocols may not necessarily remain robust. And bankers deploy arcane mathematical models in order to make large bets on novel financial instruments that test the limits of their own capacity to avoid so-called “tail risk” where catastrophic losses lurk.
Risk-taking feeds on itself: The very same reasoning that once turned unknown levels of harm into calculable levels of risk threatens to flip back again into its prior state. In the Fall of 2008 all of the world’s major financial institutions had been operating with formal models known as “value at risk,” designed to put a number on the maximum possible loss resulting from each day’s operations; when the abyss opened and their risk calculations were proved worthless, none of them knew where the contagion of incalculable loss and bankrupt firms might end, or which of them would survive it: The risks they thought they understood had reverted to unknowable harm (Leiss 2010).
The greatest and most fateful paradox, which is actually generated by in part by those already mentioned, is that the scientific basis of risk-taking and risk management may carry within it the seeds of its own spectacular, ultimate failure. For each successful targeted intervention in manipulating our relation to our environment on a minor scale makes us ever more dependent on being able to perpetuate the process of manipulation indefinitely into the future, on an ever larger scale. Each round of short-term, successful intervention induces the need for more extensive ones later on. Think of antibiotics and the development of microbial resistance to them. Or the case which I shall discuss more thoroughly in a moment, our inadvertent manipulation of the earth’s climate system, from the burning of fossil fuels, which may require us to experiment with massive geo-engineering experiments in the future. We cannot jump off this treadmill.
Moreover, driven by the economies of scale and comparative advantage, the globalization of production of economic goods integrates the fates of nations and regions every more tightly; now all want the additional industrial development pioneered by the West – and why shouldn’t they? But this fact introduces the added complexity of requiring coordinated action through international agreements, something that in itself has been shown to have its own treacherous difficulties.
All of this leads to enormously increased pressures and impacts on the globe’s key biophysical resources, including potable water, energy, agricultural soil, unpolluted air, ocean productivity, and others (again, I will come back to this issue in a moment). These impacts must be managed in order to ensure that the productivity of these resources can be sustained over long time-frames. One of the unintended consequences is the globalization of the associated risks, which results directly from our successes in risk management on a smaller scale. With respect to diverse threats from zoonotic diseases to climate change to systemic financial risk, we are forced to acknowledge that only a coordinated international effort will be adequate to the task. But it is not at all certain that our social institutions will ever be sufficiently robust to mount such an effort in any or all of these domains.
The general point I want to make is this: The long quest to exploit nature’s resources intensively for human benefit threatens to reach its own internal limit and may collapse under its own weight. (I will explain what I mean by “internal limit” in a moment.) The reason is that this exploitation has unintended consequences that themselves must be managed, and that this management can only be done collectively, by all nations acting together; however, it is not at all certain that the will to do so can be mobilized. If it cannot, the consequences of this failure may turn out to be catastrophic for humanity as a whole.
There is an interesting attempt being made by environmental scientists to define a set of so-called “planetary boundaries” for human transformation and exploitation of the earth’s natural systems. In a nutshell, these boundaries determine the amount of the earth’s biological productivity that can be sustainably harvested by human societies. Here the word “sustainably” has a precise meaning, namely, ensuring that natural systems are capable of regenerating themselves as we use them, so that future demands on them can be met indefinitely into the future. As presented in the journal Nature in 2009, by Johan Rockström and colleagues, these boundaries include freshwater use, ozone depletion, land use changes, the nitrogen-phosphorus cycle, ocean acidification, and climate change. The authors try to show that human demands on these systems either already exceed “safe” levels of exploitation, or are close to doing so; meanwhile, of course, human numbers and levels of exploitative demands are increasing steadily.
A more recent article, in the journal Science in 2012, by Steven Running, combines these determinants of planetary boundaries into a single indicator, namely, “terrestrial net primary plant production” (abbreviated as the “NPP boundary”). He notes that “plant matter [from solar energy, water, and atmospheric CO2] … sustains the global food web and becomes the source of food, fiber, and fuel for humanity.” He concludes: “Consideration of current land use patterns and the projected rise in the human population suggest that human consumption may reach the global NPP boundary within the next few decades.” (This is in a way an updated version of the famous Limits to Growth argument from 1972; contrary to what many believe, as shown in a recent review [Turner 2008], events in the intervening forty years have validated much of the business-as-usual scenario presented there.)
We have no “political” process in place, at the international level, that could even pretend to manage the future course of the human impacts on the earth’s biological productivity. So let’s just hope that these scientists are deluded.
Consider at greater length the issue of global climate change. This is part of the central story of the last few centuries, the story of the industrial revolution, because fossil-based energy sources are the principal driver and enabler of industrialism. Fossil energy use has been growing since the middle of the eighteenth century; by the mid-point of the present century, three hundred years later, in 2050, it will still represent about three-quarters of global energy demand. The story about the consequences of our energy use involves, first, the scientific theory of the natural Greenhouse Effect (2012), developed in the 19th century from Fourier (1824) to Arrhenius (1896), telling us why the earth is a full 33°C warmer than it would otherwise be in the absence of this effect.
The later theory of anthropogenic (human-caused) warming, known as the theory of radiative forcing, tells us that the massive amounts of greenhouse gases we have added to the atmosphere during the last three centuries, largely from the burning of fossil fuels, almost certainly will produce a range of adverse effects – changes to long-term weather patterns – of very large magnitude. This insight began with a famous paper by Roger Revelle and Hans Suess in 1957 (Revelle 2012). [I did my doctoral work at Revelle College at UCSD.] Beginning in 1965, a long series of expert panel reports published by the U. S. National Academy of Sciences, followed by a series of massive reports under the auspices of the Intergovernmental Panel on Climate Change (IPCC), based on thousands of papers published in peer-reviewed scientific journals, confirmed this original insight. Almost certainly this is the largest collaborative undertaking in the history of modern science. Unfortunately, it showed that our manipulation of the earth’s climate was inadvertent, and that we fully comprehended the nature of our actions very late in the game, making the deployment of any counter-measures both difficult and, ultimately, expensive.
This is actually a very hard problem, both of precise understanding and of action based on it. The earth’s climate system moves massive amounts of energy around the globe and is the result of an extremely complex set of factors, including the nature of the sun’s electromagnetic radiation, variations in the amount of solar energy, the tilt of the earth’s axis, its rotation around its axis as well as its orbit around the sun, the capacity of its oceans to act as a carbon sink, the function of clouds, the heat-trapping potential of various gases, and others. This means that over long periods of time the earth’s climate varies substantially. Thus the scientific account of climate is necessarily as complex as is its subject, and simulations – the so-called climate models – require the most powerful computers to run them. In fact, it is so complex that most of us have to take it on trust, as we do with all the rest of contemporary scientific output.
This is a very hard problem for other reasons as well, the most important of which is the time-frame for climate change impacts and the lag effect of radiative forcing. Lag effect means that we do not observe the ultimate results of human inputs to the climate system for a very long time, indeed, over many generations. And to put the point bluntly, we are bad enough at making sensible political decisions under conditions where the evidence stares us in the fact, so to speak; when it comes to projections about what may happen far into the future, we are, frankly, quite hopeless.
The massive IPCC summary of the scientific analysis of climate change at present is encapsulated in the conclusion that anthropogenic greenhouse gases are “responsible for most of the observed temperature increase since the middle of the twentieth century.” This conclusion is reported as “very likely” to be the case (>90% probability, with high confidence). Since we are still accelerating the process of radiative forcing, because our greenhouse-gas emissions are steadily rising, substantial future rises in temperature are inevitable. And indeed there is some plausible probability that in the relatively near future some massive positive-feedback loops may kick in, for example additional warming induced by the release of methane stocks now locked into Arctic permafrost, leading to the possibility of a “runaway” greenhouse effect.
At some point, likely before the year 2100, these temperature increases are likely to be very disruptive, in terms of our established life-styles, producing massive dislocations in human settlements. In a recent book (Leiss 2010) I have called this a “black-hole risk,” meaning a risk with a potential downside so enormous in scope that we cannot even estimate how bad it might be.
Climate change is a global problem. It can only be dealt with in the context of an overall international agreement with specific and binding commitments, enforced by penalties, for the failure of any nation to meet GHG emissions reductions targets. This year, 2012, marks the end of a twenty-year period of failure, starting with the 1992 “Rio Conference” and continuing through the ratification and then abandonment of the “Kyoto Protocol,” to achieve any such agreement. Will we succeed if we try again? Do we even want to try? At present the answer is a resounding “No.” [It’s not that we haven’t ever succeeded in doing this, as the international convention on ozone-hole depletion shows (see Leiss 2005). But in that case we had a nice picture of the hole in space, and the threat of elevated skin-cancer risk, to settle the public debate on the need for risk control.]
Climate risk mitigation requires controlling human-caused GHG emissions. Like all risk mitigation this will cost money, for example, by means of a carbon tax on every person’s fossil-energy use, perhaps a small tax at first, but probably quite a hefty one later on. Who here today wants to start paying? Remember, you have to start paying now in order to avoid the really harmful consequences that “very likely” may befall your great-great-great grandchildren by the year 2100. Note that there is only a certain probability of these harms happening, albeit a high one (>90%). Admittedly, it’s a lot cheaper just to hope that it won’t happen after all, letting your distant descendants take their chances with the outcome of the bet you make today. Or to simply adopt the belief that the climate science predicting this outcome is a “hoax” – as many U. S. citizens do, according to opinion polls, apparently trusting the many web-based propaganda organs that promote this canard. [See the excellent PBS Frontline program, “Climate of Doubt,” broadcast earlier this week.]
The United States is home to the largest, most lavishly-funded scientific enterprise the world has even seen. The mere suggestion that one of the crowning glories of that enterprise, climate science, could be a hoax – that is, a deliberate deception – is, or at least ought to be regarded as, simply ludicrous. But the fact is that the opposite idea, namely, that the science of climate change provides a plausible basis for starting to pay a carbon tax now, cannot even be discussed in this country (the situation is not much better anymore in Canada, which once ratified the Kyoto Protocol). Just remember: Every belief we hold about the future is a bet. And in another 20 or 30 years it won’t even matter which way we have bet on climate change risk: At current and projected levels of GHG emissions growth, by around 2050 we will have reached the point where any contrary action would be pointless (see McKibben 2012): Those alive at that point can all just join in singing Que sera, sera.
Everything we ordinarily believe in trusting the results of science in our lives, such as following medical routines and operating the countless gadgets we depend on, tells us that our bet against the believability of climate science is a very bad wager. Some people think that the only good bet is to trust our technologies to deal with global warming later on, if we are eventually forced to conclude that we need to counteract our radiative forcing, by geo-engineering: putting thousands of orbiting mirrors up in the stratosphere to reflect sunlight back into space, or producing more cloud cover by spraying huge quantities of sulfur dioxide into the lower atmosphere (thus mimicking the effects of volcanos), or dumping iron into the oceans to stimulate algae growth for carbon sequestration. If you think that, having failed to manage other types of human impacts on the planet, we are likely to pull off this one without a hitch, you are to be regarded as a true Panglossian.
At the gaming tables, when your bets have turned against you and you respond by raising the ante, it’s called “doubling down.” Here the size of the bet we are making, by pretending that everything is under control, with respect to our manipulation of the planetary ecosystems, is approaching the “all in” scenario. It is in my view not an exaggeration to say that we are wagering on the future of industrial civilization itself. For myself, I doubt whether this will end well. [Some of you in this room will be alive in 2050, when the future course of this risk scenario will be a lot clearer than it is now. Please remember to send the rest of us who are no longer with you an email message; for myself, I hope to be partying with the Devil, so you can reach me in Hell.]
Humans are a clever and adaptive species and would surely survive such a catastrophe. But the current revival of interest in the thinker who is perhaps the greatest political theorist of the modern age, Thomas Hobbes, should remind us that life once was “solitary, poor, nasty, brutish and short,” and might be so again.
Conclusion: The Inner Contradiction within Risk Management.
The deep truth about risk and risk management has to do with our propensity to push our wholly inadequate managerial capacities to the limit, all the while protesting that no such limit exists. Our reaction to encountering unforeseen obstacles is to “double down” on the first bet, raising the stakes dramatically: If climate change risk arises from the technologies that allow us to combust fossil fuels on a prodigious scale, we are inclined not to hedge the first bet but rather to double it by envisioning using entirely new technologies on an equivalent scale to counteract the initial effect. To take another specific example, there is the notorious case of Bruno Iksil of JPMorgan Chase, known as the “London Whale” for the sheer size of his bets, who apparently, earlier this year, “doubled down” repeatedly as the markets turned against his bet, until his bank was forced to exit his positions in the derivatives markets at a cost of $7 billion and counting. This case shows that bankers reacted to the damage done by exotic financial instruments in the 2008 financial crisis by deploying risk control strategies so complex that, it seems, not even the bank’s senior management personnel and its CEO understood what their traders were doing or how much the potential hit on the downside could add up to.
I remain, I confess, an incorrigible Hegelian. In this failure to understand how the most exquisitely-tuned rationalism can magnify, rather than mitigate, our vulnerability to the downside risk, can delude us into imagining that we have become the unchallengeable masters of our planet’s ecosystems, and can tempt us into wagering all of the accumulated gains of the last few centuries on a few final throws of the dice, I see the cunning of unreason at work.
Do you recall Goethe’s marvelous poem from 1797, “The Sorcerer’s Apprentice” (2012), where the hapless assistant overestimates his ability to deploy safely his master’s magic incantations? The risk managers I just mentioned probably think that this is an entertainment for children because Walt Disney made an animated cartoon out of it. How little they know.
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Beck, Ulrich (1992). Risk Society: Toward a new modernity. London: Sage [see Leiss, book review (1993): http://www.ualberta.ca/~cjscopy/articles/leiss.html].
Bernstein, Peter L. (1996). Against the Gods: The remarkable story of risk. New York: Wiley.
Iksil, Bruno (2012): http://en.wikipedia.org/wiki/Bruno_Iksil
Leiss, William (1972). The Domination of Nature. Montreal: McGill-Queen’s University Press, 1994.
Leiss, William (2005). “Ozone and Climate”: http://leiss.ca/wp-content/uploads/2009/12/ozone_and_climate.pdf
Leiss, William (2008). The Priesthood of Science. University of Ottawa Press.
Leiss, William (2010). The Doom Loop in the Financial Sector, and Other Black Holes of Risk. University of Ottawa Press.
Leiss, William (2011). “Modern Science, Enlightenment, and the Domination of Nature: No Exit?” In: Critical Ecologies, ed. Andrew Biro (University of Toronto Press), pp. 23-42.
Leiss, William et al. (2008): W. Leiss, M. Tyshenko, and D. Krewski, “Men having sex with men donor deferral risk assessment,” Transfusion Medicine Reviews, Vol. 22, no. 1, 35-57.
McKibben, Bill (2012). “Three simple numbers that add up to global catastrophe.” RollingStone, 19 July: http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719
Greenhouse Effect (2012): http://en.wikipedia.org/wiki/Greenhouse_effect
PBS Frontline, “Climate of Doubt,” 23 October 2012: http://www.pbs.org/wgbh/pages/frontline/climate-of-doubt/
PBS Frontline, “The Vaccine War,” 27 April 2010: http://www.pbs.org/wgbh/pages/frontline/vaccines/view/
Revelle 2012: http://en.wikipedia.org/wiki/Roger_Revelle.
Rockström, Johan (2009). “A safe operating space for humanity.” Nature 461 (24 September), 472-5.
Running, Steven W (2012). “A measurable planetary boundary for the biosphere.” Science 337, 1458-9.
“The Sorcerer’s Apprentice” (2012): http://en.wikipedia.org/wiki/The_Sorcerer’s_Apprentice
Turner, Graham M (2008). “A comparison of The Limits to Growth with 30 years of reality.” Global Environmental Change 18, 397-411.
William Leiss: RiskBlog 1 March 2012
Once More, discount Understanding Systemic Financial Risk
Andrew Palmer’s recent essay on financial innovation in The Economist, “Playing with fire” [25.02.12: http://www.economist.com/node/21547999] has received a lot of attention. Read it, but also read the trenchant critique by Satyajit Das, one of the most perceptive observers on the subject. (Read his frequent blogs; his books, listed below, tend to be rather long-winded and egoistic, a compilation of scattered thoughts.)
The global financial crisis which began in 2008 is a slow-moving massive train wreck that may take an entire decade to bring under control. The catastrophic events of 2008 – still reverberating today, more than three years later, in the European sovereign debt crisis – have caused losses of many trillions of dollars. The scope of the losses is almost uncountable [http://bettermarkets.com/blogs/financial-reform-will-keep-wall-streets-hands-out-taxpayer-pockets, from “Better Markets,” a website I recommend]. This is why it is the best illustration of what I have called a “black hole of risk” in my book, The Doom Loop in the Financial Sector [www.blackholesofrisk.ca/].
Regulatory reform of the financial sector is designed to help us avoid a repeat of these events. But the struggle for regulatory reform is far from won, because of intensive lobbying by big banks and financial sector interests. The current battle is over the so-called “Volcker rule,” designed to reduce risks from investment banks trading on their own accounts: to understand this one, and others like it, follow “Baseline Scenario,” written by Simon Johnson and James Kwak [http://baselinescenario.com/]. If the bankers win this one, and others, they’ll do it again to the rest of us: Take obscene amounts of money for themselves during the good times, and saddle the taxpayers with the costs of bailouts when they bring on the bad times again.
Part of the reason for this extended train wreck is that at least one solution adopted by governments to respond to it is itself the cause of future problems. I refer to the central banks’ policy of mandating near-zero interests rates over long terms. It is already clear that this policy solution is devastating the financial health of insurance companies and pension plans, failing to rewards savers, and encouraging imprudent borrowing. Even the Bank of Canada, which joins other central banks in this flawed policy, acknowledges its downside risks, calling attention in its December 2011 review report to “a prolonged period of low interest rates, which may encourage imprudent risk-taking and/or erode the long-term soundness of some financial institutions” (preface, page 1), available at: [http://www.bankofcanada.ca/wp-content/uploads/2011/12/fsr_1211.pdf] Of course, it uses the typical wishy-washy bureaucratic language of “may” encourage or erode, which is irresponsible: The serious damage being done to the insurance industry and pension funds from the extremely low interest-rate policy of central banks has already been widely reported, and it poses a serious risk to the security of the future retirement plans of millions of Canadians.
In his recent blog, below, Satyajit Das explains that Palmer’s essay overlooks the most crucial truths about the nature of risk in recent financial innovations, among them: (1) a lack of transparency in the transactions; (2) a slow-growing “concentration” of risks that remains in the shadows until it’s too late to stop the collapse. This is what we now call “systemic risk” in the financial sector. A broad public understanding of systemic risk – which takes a bit of effort for citizens, I admit – is essential to build public support against the bankers for effective regulatory reform. The security of your retirement assets depends on your making this effort.
Environmental Release of Genetically-Engineered Mosquitoes:
The Latest Episode in Frankenstein-Type Scientific Adventures
William Leiss (2 February 2012)
The subtitle for this essay is merely descriptive – not at all intentionally provocative – and is meant to be taken literally. By “Frankenstein-type” I mean, not the scientific work itself, but rather the arrogant and thoughtless act of a scientist in releasing a novel entity into the environment without adequate notice or prior discussion with the public, whether accidentally (as in the case of Mary Shelley’s story) or deliberately. Should this practice continue, as I suspect it will, almost certainly there will eventually be a very bad ending – for science itself. Only remedial action by other scientists themselves can head it off, and so far such action is noteworthy by its absence. They will regret this omission.
Yesterday’s story in Spiegel International Online by Rafaela von Bredow, “The controversial release of suicide mosquitoes” (http://spon.de/adztv), prompted me to look further. And sure enough, I had missed an earlier report in the publication I most rely on for such matters, The New York Times, in the edition dated 31 October 2011, written by Andrew Pollack: “Concerns raised over genetically engineered mosquitoes” (http://tinyurl.com/7remh3q). Other sources for this issue can easily be found by putting “genetically engineered mosquitoes” into your preferred Internet search engine.
The Aedes aegypti mosquito carries the dengue virus, which causes the most important insect-borne viral disease (dengue fever) in the world. Worldwide there are an estimated 50-100 million cases and at least 20,000 fatalities (mostly children) annually, and there is no vaccine or adequate therapy. It is a serious public health burden in many countries. Papers in the scientific literature about the possibility of attacking the problem by modifying or genetically engineering the mosquito itself have appeared over the past fifteen years. The dominant approach of this type is to release sterilized male mosquitoes into the environment which upon mating with females will produce no young. This approach has shown limited success.
The recent publicity has to do with a new approach in which laboratory-bred male mosquitoes are genetically engineered to express a protein that causes the larvae to die. The gene was developed by a biotechnology company in Oxford, England. The controversy involves the decision made by the company to seek approval for the environmental release of the GE mosquitoes in confidence – without public release of relevant information – from governments in various countries. This began in 2009 in the Cayman Islands; later releases took place in Malaysia and Brazil, and future releases are scheduled in Panama, India, Singapore, Thailand, Vietnam, and Florida.
Here’s an extract from Andrew Pollack’s story:
In particular, critics say that Oxitec, the British biotechnology company that developed the dengue-fighting mosquito, has rushed into field testing without sufficient review and public consultation, sometimes in countries with weak regulations.
“Even if the harms don’t materialize, this will undermine the credibility and legitimacy of the research enterprise,” said Lawrence O. Gostin, professor of international health law at Georgetown University.
Luke Alphey, the chief scientist at Oxitec, said the company had left the review and community outreach to authorities in the host countries.
“They know much better how to communicate with people in those communities than we do coming in from the U.K.” he said.
Rafaela von Bredow’s recent and useful follow-up report in Spiegel Online also includes comments from other scientists, in particular two who are working on competing projects. The first reference below is to Guy Reeves of the Max Planck Institute for Evolutionary Biology in Plön, Germany:
The geneticist [Reeves] doesn’t think Oxitec’s techniques are “particularly risky” either. He simply wants more transparency. “Companies shouldn’t keep scientifically important facts secret where human health and environmental safety are concerned,” he says.
Reeves himself is working on even riskier techniques, ones that could permanently change the genetic makeup of entire insect populations. That’s why he so vehemently opposes Oxitec’s rash field trials: He believes they could trigger a public backlash against this relatively promising new approach, thereby halting research into genetic modification of pests before it really gets off the ground.
He’s not alone in his concerns. “If the end result is that this technology isn’t accepted, then I’ve spent the last 20 years conducting research for nothing,” says Ernst Wimmer, a developmental biologist at Germany’s Göttingen University and one of the pioneers in this field. Nevertheless he says he understands Oxitec’s secrecy: “We know about the opponents to genetic engineering, who have destroyed entire experimental crops after they were announced. That, of course, doesn’t help us make progress either.”
H. G. Wells published his novel, The Island of Doctor Moreau, in 1896: See the Wikipedia entry, http://en.wikipedia.org/wiki/The_Island_of_Doctor_Moreau; the entire book is online at: http://www.bartleby.com/1001/. His story deals with a medical scientist living on a remote island who creates half-human/half-animal creatures. In more recent times we have become aware of experiments in genetic engineering, such as cloning, that have been done in some countries, notably South Korea, and have raised serious issues in scientific ethics. (See the New York Times editorial of December 2005 [http://tinyurl.com/7xmdlgt] and follow the links, or just search for “cloning South Korea.”) Later publicity concerned the cloning of human embryos in China: See the New Scientist article (http://tinyurl.com/7sguhgq) from March 2002. Significant differences among countries in terms of government regulatory regimes and scientific research ethics programs remind us of the Wells’ scenario.
Other modified insects using the earlier technology (males sterilized with radiation), notably the pink bollworm, have been released to control plant pests. The GE mosquitoes from Oxitec are the first to use the new technology for a human health problem. They could very well represent an enormous human benefit with insignificant or even no offsetting risks – although it would be very nice to have a credible and publicly-available risk assessment certifying the same (perhaps we will get one from the U. S. Department of Agriculture, which has to approve the field trial in Florida). It is quite possible that very few people living in countries affected by dengue fever would have any objections to the use of GE mosquitoes.
But the biggest risk involved in the use of unpublicized field trials (environmental release) for GE mosquitoes is to scientists and scientific research itself. Readers of my recent blog, (http://leiss.ca/wp-content/uploads/2011/12/Nature-is-the-biggest-bioterrorist.pdf), on the genetic engineering of the H5N1 avian flu virus, will recall the interesting issues in scientific ethics raised in that case which are different from, but related to, those in the current one.
Both of these sets of issues encompass the ability and willingness of the scientific community to “police” research practices with the long-term public interest in mind. To do so they would have to create deliberative structures both international in scope and sufficiently robust to enforce their strictures on unwilling members of their community – for example, by an enforceable policy of denial of research grant funding and publication in journals. (The suggestion here avoids any necessary involvement by government authorities.) This is a tall order, to be sure, but there are a few precedents, notably the 1975 Asilomar Conference (http://en.wikipedia.org/wiki/Asilomar_Conference_on_Recombinant_DNA).
In the case of GE mosquitoes, the offhand comment by the lead scientist, Luke Alphey, quoted above from Andrew Pollack’s article, with its crude justification for ignoring his own clear responsibility for initiating public disclosure and deliberation, is telling. The other scientists who were quoted in the two articles referenced above were obviously unhappy with him, but they did not suggest what remedies might be imposed for such irresponsible acts. This despite their recognition that it is the genetic engineering of plants and animals that has been already a source of both intense public curiosity and equally great concern, a phenomenon that will inevitably grow in importance with each further advance in scientific discovery and application in this field. For scientists to ignore the risks to their own activities in this domain is foolish and short-sighted indeed.
The first famous example was the debate among some scientists over the use of the first atomic bomb in 1945: See the discussion in the Back Section of my 2008 book, The Priesthood of Science (http://www.press.uottawa.ca/book/the-priesthood-of-science).
“Complexity cloaks Catastrophe”
William Leiss (17 January 2012)
Good risk management is inherently simple; adding too many complexities increases the likelihood of overlooking the obvious.
Leiss, “A Short Sermon on Risk Management” (http://leiss.ca/?page_id=467)
The quoted phrase that forms the title for this paper comes from the opening pages of Richard Bookstaber’s indispensable 2007 book, A Demon of our own Design: Markets, hedge funds, and the perils of financial innovations (New York: Wiley). This book inspired much of my own subsequent work in this area, as published in The Doom Loop in the Financial Sector, and other black holes of risk (University of Ottawa Press, 2010: e-book available at: http://www.press.uottawa.ca/book/the-doom-loop-in-the-financial-sector); see the section on “Complexity” at pages 80-83). Bookstaber’s key point is that complexity in financial innovations is itself an important risk factor for systemic failure in the financial sector.
Now the New York Times columnist Joe Nocera has written in his January 17 column, “Keep it Simple” (http://www.nytimes.com/2012/01/17/opinion/bankings-got-a-new-critic.html?hp), about an important new source for this topic. This is a November 2011 paper prepared by staff at a firm called Federal Financial Analytics, Inc.: “A new framework for systemic financial regulation: Simple, transparent, enforceable, and accountable rules to reform financial markets,” available as a PDF file at: http://www.fedfin.com/images/stories/client_reports/complexityriskpaper.pdf.
In effect, both the paper and Nocera’s commentary argue – with reference to the U. S. Dodd-Frank Act – that responding to complexities in financial innovations with complex regulatory regimes is a mug’s game. It does not solve the problem of “complexity risk” and in fact may exacerbate that risk. It also does a poor job of anticipating the next challenge, as the recent collapse of MF Global shows.
The Obama administration has put its faith in “smart regulation,” which ignores the fact that it is the industries being regulated which can hire the smartest people and task them with finding a way to circumvent any set of rules, however complex. (Meanwhile, his Republican opponents work feverishly to gut his regulatory agencies of competent staff and leaders.) Similarly, the authors of the paper, “A new framework for systemic financial regulation,” propose solutions involving new corporate-governance regimes, but the private-sector risk governance regimes failed utterly the last time around, so why on earth would the rest of us want to retry this experiment?
In the end we have to turn to the most reliable guide, Simon Johnson, whose advice is simple: Break up the big banks. (Follow his blogs at: http://baselinescenario.com/; the latest is, “Refusing to take yes for an answer on bank reform.”) Banks to big to fail should be regarded as too big to exist. And yet the leading financial institutions in the United States are bigger than ever. No “systemically-important financial institution” will ever be allowed to fail. The bankers who run them know this. They also know that they cannot be outsmarted by the regulators.
The Online English Edition of Der Spiegel has a brilliant analysis of the European debt crisis that is not to be missed.
Read “The Ticking Euro Bomb” (October 5-7, no rx 2011):
Part 1, advice Section 1: “How a good idea became a tragedy”: http://www.spiegel.de/international/europe/0,1518,790138,00.html
Part 1, Section 2: “The Greeks jump at the opportunity”: http://www.spiegel.de/international/europe/0,1518,790138-2,00.html
Part 1, Section 3: “The critics of the Euro”: http://www.spiegel.de/international/europe/0,1518,790138-3,00.html
Act II: Life with the Euro (2001 – 2008):
Part 2, Section 1: “How the Euro Zone ignored its own rules”:
Part 2, Section 2: “The Greek deception is discovered”: http://www.spiegel.de/international/europe/0,1518,790333-2,00.html
Part 3, Section 1: What options are left for the common currency? http://www.spiegel.de/international/europe/0,1518,790568,00.html
Part 3, Section 2: Greece adrift http://www.spiegel.de/international/europe/0,1518,790568-2,00.html
Part 3, Section 3: Design defects, political weakness, public disinterest http://www.spiegel.de/international/europe/0,1518,790568-3,00.html
Part 3, Section 4: Are European rescue efforts doomed to fail? http://www.spiegel.de/international/europe/0,1518,790568-4,00.html
Summaries – and links back to the originals – on the reports on the oil spill.
Three papers on risks associated with the long-term storage of high-level radioactive waste in Canada, mind commissioned by the Nuclear Waste Management Organization: Go to http://www.nwmo.ca/conceptofrisk
Paper #1: How should matters of risk and safety be discussed?
The first paper addresses the question of how to approach discussions about risk in this area. Four “reference frames” are used to demonstrate the different approaches or perspectives that can be applied to a conversation about this risk: the energy policy frame; the risk and safety frame; the overriding values frame, and; the geographical frame.
Paper #2: How might communities organize their discussions about hosting a site for used nuclear fuel?
This paper presents a variety of deliberative tools that a community might use when holding discussions about hosting a facility. Communities involved in a site selection process may wish to consider how the process of engagement might unfold in the context of their own unique situation, and the author describes some types of formal and informal methods for facilitating reasoned debates about controversial issues.
Paper #3: What is happening in other countries where similar issues about used nuclear fuel are being discussed?
This final paper deals primarily with high-level radioactive waste management and provides an overview of the plans of various countries to deal with their high-level waste. All of the information is taken from publicly-available Internet sources, most of which are websites maintained either by national agencies that have legal responsibility for the waste within their borders, or international agencies with other types of mandates in this area. Profiles for 16 countries are provided, along with a large collection of references and links to internet-based resources, as well as a table illustrating the progress of each country in managing radioactive waste.
William Leiss, OC, PhD, FRSC
The following series of short essays was written in the period June – August 2011 and posted on my website: www.leiss.ca. Similar pieces will be added to the series on a regular basis. If you are interested in them you may check the website periodically or follow me on Twitter (@WilliamLeiss), where I post a Tweet (a) each time a new short blog appears on my website and (b) when I read something in the current press relevant to risk issues and provide the URL for those who also might want to read it.
Update: the PDF was updated August 29, 2011
Before 2008 financial industry professionals arranged to deceive local government officials around the world about the risks inherent in their “structured” products, pilule costing the citizens those officials worked for huge losses they could ill afford. Much of this sad story has been told in excellent investigative journalism accounts published in The New York Times, some of which are referred to in my 2010 book, The Doom Loop in the Financial Sector and Other Black Holes of Risk (University of Ottawa Press), pages 38-43. Here I refer to developments occurring after the book was finished, as well as one other newly-reported important episode, involving school districts in the state of Wisconsin.
Duping the RubesRev3 [PDF]
Update: the PDF was updated October 3
There was an important article by Jack Ewing and Liz Alderman in the August 10 edition of The New York Times, thumb entitled “Some in Germany want Greece to temporarily exit the Euro Zone.” This article takes up issues that have been quietly heating up in the background for some time already but which are, cialis inevitably, becoming harder to ignore. Ever since the first EU bailout of Greece in May 2010, and intensifying with the subsequent Portuguese rescue mission and especially the second Greek one, both in 2011, comments emanating from Germany and elsewhere have cast aspersions on the “profligate southerners” who have come to depend on their “frugal” northern compatriots to rescue them from financial disasters of their own making.
Full article: Risk Risk Tradeoffs [PDF]
Environmental risks associated with drilling for shale gas, prescription and the extraction process known as “hydraulic fracturing” [“fracking”], are receiving a good deal of attention in Canada, the United States, and elsewhere.
The state of New York has had a moratorium on shale gas development for the past year, but Governor Mario Cuomo has recommended that it be lifted in favour of permitting activity in selected areas. The Province of Quebec now has a two-year moratorium in place and has indicated that further research will be required before it is known whether the environmental risks can be limited to acceptable levels.
Readers who are interested in this issue, especially those who live in or near areas where underground shale deposits may attract this activity, will be interested in the following current resources.
Shale Gas Drilling [PDF]
Here’s the latest from the Greek debt crisis:
“Europe is seeking to avoid a default at all cost because it could also initiate payment of credit-default swaps, there with unpredictable results. There is little public information on which financial institutions have sold credit-default swaps and might have to absorb losses if Greece defaulted, there but it is likely that American banks and insurance companies have taken on the largest share. The shock to the global economy might compare to the collapse of Lehman Brothers in 2008, illness the European Central Bank has warned.” (Jack Ewing & Landon Thomas Jr., “Europe faces tough road on effort to ease Greek debt,” The New York Times, 4 July 2011)
Wait a minute! In credit default swaps the first party pays a premium to a second party in order to “insure” the value of an amount invested in corporate or government bonds made by the first, and the second party guarantees to make up the shortfall if that investment loses value, for example where the issuers of the bonds default on their debt.* Derivatives such as credit default swaps are a risk management strategy for investors, protecting them (for a price) against large losses. So how does this very sensible risk mitigation strategy, used by individual investors, end up causing or exacerbating another broad financial crisis?
The month of June 2011 marks the first anniversary of the release of Air India Flight 182: A Canadian Tragedy, illness the final report of the Commission of Inquiry into the Investigation of the Bombing of Air India Flight 182, troche headed by Mr. Justice John Major.
The mid-flight destruction of Flight 182 off the Irish coast on 23 June 1985 killed all 329 passengers and crew; an explosion at Narita Airport in Japan, which was part of the same terrorist plot, killed two baggage handlers there. The resulting toll represents, still today, the second-largest loss of life (second only to the September 11, 2001 events in the United States) in a single terrorist plot ever to occur anywhere in the world.
As we are now seeing in the long-running global financial crisis, decease the initial stages of catastrophic failures in risk management can have follow-on consequences over long periods of time. In the case of blood donation risk, the infection of blood recipients by the HIV and Hepatitis C viruses in many countries around the world, including Canada, in the 1980s was such a catastrophic failure. This risk is known as “transfusion-transmitted infection” (TTI). Full post here: Catastrophic Failures in Risk Management 3 [PDF]
Judging from the various articles in this Tuesday’s Globe and Mail, there remains a fair amount of confusion, here and elsewhere, about airline security in the wake of the latest terrorist plot. Those of us who are “risk junkies” have been expecting something like what happened on Northwest Flight 253 since early last September – and, we fervently hope, government security officials, especially in the United States, have too, even though they missed Mr. Abdulmutallab.
What’s next? Click “(More…)” below, and let’s do some serious risk management.
Public experience with risk communication differs greatly from country to country in Europe and there has been little opportunity for the transfer of experience and learning between countries. This is especially true for the many new European States, story including the countries in transition from centralised to market economies. This book presents case studies on risk communication. One of its unifying concepts is the role of risk communication in the risk management process. Technical and philosophical introductions to risk communication and risk management and research in risk communication are given. The case studies themselves occupy the central portion of the book, troche each one covering a particular hazard, risk or situation seen from a particular point of view. The issue of the special circumstances for environmental and health risk communication in central and eastern Europe is also addressed through a separate presentation and discussion of an appropriate case study. A different approach to risk communication is taken by examining how it forms part of the risk management process at the local level. Research into risk perception, a field that forms an important foundation for many aspects of risk communication, is summarised and practical guidelines for risk communication are reviewed. These include discussions on how to carry out public information programmes and methods for increasing public involvement in risk management decisions.
William Leiss was a member of the editorial committee for this book.
In this book I demonstrate that case studies of risk controversies show that the instinctive response of managers to deny that risk controversy issues under discussion are significant and to insist that the parties presenting them have no business meddling in such matters are unreliable guides to effective risk management and that in all cases the opposite position is a far better guide. As risk management is inherently disputable, find public perceptions of risk should be seen as legitimate and treated as such and the public should always be involved in discussions about risk evaluations made by scientists and risk managers.
I chronicle the erratic course of risk management and communication in environmental management in Canada, recipe discussing the notable controversies that have arisen over pesticides and breast cancer, vinyl toys, genetically engineered food crops, cellular telephones, and antibiotic-resistant bacteria, among many others.
Communicating the nature and consequences of environmental and health risks is one of the most problematic areas of public policy in western democracies. Given the perceived risks associated with the food we eat, chemicals in the environment, and modern technologies, consumers need clear and timely explanations of the nature of those risks – but rarely get them. Using a series of case studies, Douglas Powell and William Leiss outline the crucial role of risk management in dealing with public controversies and analyse risk communication practice and malpractice to provide a set of lessons for risk managers and communicators. The Second Edition is a republication of original edition plus three new chapters.
Preface to the Second Edition
Part Three: New Perils for Risk Managers
Two Stinking Cows: The Mismanagement of BSE Risk in North America,
by William Leiss (pp. 229-61)
A Night at the Climate Casino: Canada and the Kyoto Quagmire,
by Stephen Hill & William Leiss (pp. 262-95)
Life in the Fast Lane: An Introduction to Genomics Risks,
by Michael Tyshenko & William Leiss (pp. 296-340)
Bitter disagreements arise over how to manage health and environmental risks. Trying to determine what is in the public interest is at the heart of these disagreements, but the core concerns of major sectors – industry, governments, and voluntary associations – are also at stake. Attempts to defuse the controversies and find solutions acceptable to all parties have met with little success.
Leiss and Chociolko show that controversies arise in part because many participants try to avoid assuming full responsibility for the consequences for the risk taking they advocate. Through documented case studios they address the difficulties of arriving at reliable scientific estimates of risk in controversial areas and the impact of this uncertainty on disagreements among different interest groups over how to manage those risks responsibly. In conclusion, they attempt to delineate conditions under which consensus on the assessment and management of environmental health risks might be achieved among a wide range of interest groups.
Table of Contents and Index: PDF