Risk Governance : Defining a Better Process for Risk Communication and Stakeholder Participation : Ortwin Renn IRGC Stuttgart University and DIALOGIK gGmbH.

Risk Governance: Defining a Better Process for Risk

Communication and Stakeholder Participation:

Ortwin Renn

IRGCStuttgart University and

DIALOGIK gGmbH

The Basic Fabrics of Risk Governance

The Five Components of Risk Governance

Requirements for Integrated Risk Concepts Concepts that link risk assessment with risk perception and socio-

cultural processing of riskAvoiding relativist view of knowledge but including social constructions of

risksLink between risk assessment, management and communication

Concepts that link physical risk analysis with financial, economic and social risk;Explore social amplification pathwaysConsider trans-sectoral and trans-boundary ramifications

Concepts that link risk theory with organizational capacity building and management competencySystematic use of management sciences and decision aidingEmphasis on risk communication between and among agencies and

professionals

Oct 2007 Introducing the IRGC’s Risk Governance Framework 4

Emergence of systemic risks that are:

transboundary socially amplified via perception and social

mobilisation subject to expert dissent regarding risks and

benefits unmanageable by single organisations difficult to communicate

New Challenge: Systemic Emerging Risks

August 2007 Introducing the IRGC’s Risk Governance Framework 5

There is a need for improvedRISK GOVERNANCE

Governance refers to the actions, processes, laws, traditions and institutions by which authority is exercised and decisions are taken and implemented.

Risk is an uncertain (positive or negative) consequence of an event or an activity with respect to something that humans value

Risk governance refers to the actions, processes, laws, traditions and institutions by which decisions about risk handling are prepared, taken and implemented

Best practice in risk governance integrates the principles of good governance within the processes of risk identification, assessment, management and communication and includes criteria such as effectiveness, accountability, efficiency, fairness and social and ethical acceptability


COMMON DEFICITS IN RISK GOVERNANCE

Framing – different stakeholders have conflicting views of the issue Scope – a risk perceived as only local may have global

consequences (and vice versa) There is a scarcity of data about the risk or people’s perceptions of

it or, if data does exist, there is a failure to accept it Transparency – trade-offs are not made explicit and hidden

agendas seem to determine the outcome Inequity – decisions allot the risk and benefits unfairly Accountability – decision makers are isolated from the impact of

their decision Alienation – people or organisations are ignored (can lead to social

mobilisation) (also “Authority knows best”) Lack of trust in the process or the communication channel “Paralysis by analysis” – overly inclusive process leads to inertia


Deciding

Management Communication Appraisal

CONVENTIONAL RISK HANDLING

Most risk handling processes do not go beyond these steps

Who needs to do what, when?

Who needs to know what,

when?

The knowledge needed for

judgements and decisions


DecidingUnderstandingPre-assessment

ManagementCommunication

Characterisation and evaluation

Appraisal

IRGC’s RISK GOVERNANCE FRAMEWORK

Who needs to do what, when?

Who needs to know what,

when?

Is the risk tolerable,

acceptable or unacceptable?

Getting a broad picture

of the risk

The knowledge needed for

judgements and decisions


INNOVATIONS IN THE IRGC’S FRAMEWORK

1. The pre-assessment phase extending problem definition

2. Including concern assessment as part of risk appraisal

3. Categorising the knowledge about the risk as: linear complex uncertain ambiguous

4. The characterisation and evaluation phase is the risk acceptable, tolerable or unacceptable?


HOW CATEGORISING THE KNOWLEDGE CAN HELP

Linear risk problems can be managed using a ‘routine-based’ strategy, such as introducing a law or regulation

Complex risks may be best addressed by accessing and acting on the best available scientific expertise, aiming for a ‘risk-informed’ and ‘robustness-focussed’ strategy

Uncertain risks are better managed using ‘precaution-based’ and ‘resilience-focussed’ strategies, to ensure the reversibility of critical decisions and to increase a system’s capacity to cope with surprises

Ambiguous risk problems require a ‘dialogue-based’ strategy aiming to create tolerance and mutual understanding of conflicting views and values with a view to eventually reconciling them

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ESSENTIAL DISTINCTIONS WITHIN THE CORE PROCESS

Assessment Sphere:Generation of Knowledge

Management Sphere:Decision on & Implementation of Actions

Risk Characterisation• Risk Profile• Judgement of the

Seriousness of Risk• Conclusions & Risk

Reduction Options

Risk Evaluation• Judging the Tolera-

bility & Acceptabiliy• Need for Risk

Reduction Measures

Tolerability & Acceptability Judgement

Pre-Assessment:• Problem Framing• Early Warning• Screening• Determination of Scientific Conventions

Pre-Assessment

Risk Appraisal:Risk Assessment• Hazard Identification & Estimation• Exposure & Vulnerability Assessment• Risk Estimation

Concern Assessment• Risk Perceptions• Social Concerns• Socio-Economic Impacts

Risk AppraisalRisk ManagementImplementation• Option Realisation• Monitoring & Control• Feedback from Risk Mgmt. Practice

Decision Making• Option Identification & Generation• Option Assessment• Option Evaluation & Selection

Risk Management

Communication

1 Knowledge Challenge: Complexity Uncertainty Ambiguity

2 Risk judged: acceptable tolerable intolerable

3 Risk Management Strategy: routine-based risk-informed/robustness-

focussed precaution-based/resilience-

focussed discourse-based


RISK GOVERNANCE INCLUDES AND IS SENSITIVE TO CONTEXT

Core Risk Governance Process• pre-assessment• risk appraisal

-- risk assessment-- concern assessment

• evaluation: tolerability / acceptability judgement

• risk management• communicationOrganisational Capacity• assets• skills• capabilities

Most risk management processes are done in this context only


RISK GOVERNANCE GOES MUCH FURTHER

Core Risk Governance Process• pre-assessment• risk appraisal

-- risk assessment-- concern assessment

• evaluation: tolerability / acceptability judgement

• risk management• communicationOrganisational Capacity• assets• skills• capabilities

Actor Network• politicians• regulators• industry/business• NGOs• media• public at large

Social Climate• trust in regulatory institutions• perceived authority of science• degree of civil society involvement

Political & Regulatory Culture different regulatory styles

Details of each phase

Integrating Disciplines and Perspectives in Risk Governance

The interplay between the five components

Phase 1

PREASSESSMENT

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COMPONENTS OF PRE-ASSESSMENT

Pre-Assessment Components

Definition Indicators

1 Problem framing Different perspectives of how to conceptualize the issue

dissent/consent on goals of selection rule dissent/consent on relevance of evidence choice of frame (risk, opportunity, fate)

2 Early warning Systematic search for new hazards

unusual events or phenomena systematic comparison between modeled

and observed phenomena novel activities or events

3 Screening (risk assessment and concern assessment policy)

Establishing a procedure for screening hazards and risks and determining assessment and management route

screening in place? criteria for screening: hazard potential,

persistence, ubiquity, etc. criteria for selecting risk assessment

procedures for: known risks, emergencies, etc.

criteria for identifying and measuring social concerns

4 Scientific conventions for risk assessment & concern assessment

Establishing a procedure for screening hazards and risks and determining assessment and management route

definition of NOAEL validity of methods and techniques for

risk assessments methodological rules for assessing

concerns

IMPORTANCE OF FRAMING

Frames represent social, economic and cultural perspectives– Challenge or problem– Opportunity or risk– Innovation or intervention

Frames determine boundaries of what is included and excluded– Time and duration (future generations, sustainability)– Location and space (the universe, all nation, the Netherlands, Le Hague)– Social class and stratus (vulnerable groups, poor, immigrants)– Types of adverse effects (physical, mental, social, cultural)– Primary or secondary impacts (ripple effects)– Criteria taken into account (risk reduction, cost, benefit, equity,

environmental justice, value violations…)


NOVELTY AND PRECAUTION: THE IMPACT OF FRAMING ON THE RISK-HANDLING OF GMOs

Copyright: Freakingnews.com

Taken from Risk governance of genetically modified crops – European and American perspectives, Joyce Tait, for publication by Springer in 2007 in the book “Global Risk Governance: Concept and Practise Using the IRGC Framework”

Some of the differences between EU and US approaches to the regulation of GM crops can be traced to a very early difference in the framing of the technology for regulatory purposes.

In the EU, GM crops were framed as a radical departure from any previous products and were seen as requiring path-breaking regulatory approaches.

The US, in line with the OECD approach, framed them as inherently similar to existing products developed through conventional plant breeding programmes and therefore not requiring any additional scrutiny beyond existing regulatory systems, for example for pesticides, food for human consumption or animal feeds (i.e. they were seen as requiring path-dependent and evolutionary regulation).

Phase 2

APPRAISAL

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RISK APPRAISAL

Risk AssessmentHazard identification and estimationExposure assessmentRisk estimation

Concern AssessmentSocio-economic impactsEconomic benefitsPublic concerns (stakeholders and individuals)


CONCERN ASSESSMENT

How do values and emotions impact on how the risk is perceived?

What are the public’s concerns and perceptions?

What is the social response to the risk? Is there the possibility of political mobilisation or potential conflict?

What role are existing institutions, governance structures and the media playing in defining public concerns?

Are risk managers likely to face important controversies (ambiguities) arising from differences in stakeholder objectives and values, or from inequities in the distribution of benefits and risks?


BRENT SPAR – UNDERESTIMATING STAKEHOLDER CONCERN

© Greenpeace / David Sims

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

Phase 3

Tolerability and Acceptability Judgment


EVALUATION – IS THE RISK ACCEPTABLE, TOLERABLE OR INTOLERABLE / NOT-ACCEPTABLE (TRAFFIC LIGHT MODEL)

Based on both the evidence from the risk appraisal and evaluation of broader value-based choices and the trade-offs involved, decide whether or not to take on the risk.

Acceptance

Reduction

Prohibition or Substitution

No formal intervention necessary

Benefit is worth the risk, but risk reduction measures are necessary

Risk so much greater than benefit that it cannot be taken on


CHARACTERISATION AND EVALUATION

What are the broader, value-based questions to consider? Characterization:

What are the societal and economic benefits and risks? Are there impacts on individual or social quality of life? Are there ethical issues to consider? Is there a possibility of substitution?

Evaluation: What are possible options for risk compensation or

reduction? How can we assign trade-offs between different risk categories

and between risks and benefits (or opportunities)? What are the societal values and norms for making

judgements about tolerability and acceptability? Do any stakeholders have commitments or other reasons for

desiring a particular outcome of the risk governance process?

Phase 4

RISK MANAGEMENT

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COMPONENTS OF RISK MANAGEMENT

Assessment Components

Definition Indicators

1 Option generation

Identification of potential risk handling options, in particular risk reduction, i.e. prevention, adaptation and mitigation, as well as risk avoidance, transfer and retention

standards, voluntary agreements performance rules restrictions on exposure or vulnerability economic incentives compensation insurance and liability labels, information/education

2 Option assessment

Investigations of impacts of each option (economic, technical, social, political, cultural)

effectiveness and efficiency minimization of side effects sustainability fairness legal and political implementability ethical acceptability public acceptance

3 Option evaluation and selection

Evaluation of options (multi-criteria analysis)

assignment of trade-offs incorporation of stakeholders & the public

4 Option implementation

Realization of the most preferred option

accountability consistency effectiveness

5 Monitoring and feedback

Observation of effects of imple-mentation (link to early warning)

Ex-post evaluation

intended impacts non-intended impacts policy impacts

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NEED FOR DIFFERENT RISK MANAGEMENT STRATEGIES

dealing with routine, mundane risks dealing with complex and sophisticated

risks (high degree of modeling necessary) dealing with highly uncertain risks (high

degree of second order uncertainty) dealing with highly ambiguous risks (high

degree of controversy) dealing with imminent dangers or crisis

(need for fast responses)

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RISK CHARACTERISTICS AND THEIR IMPLICATIONS FOR RISK MANAGEMENT (I/II)

Knowledge Characterisation

Management Strategy

Appropriate Instruments Stakeholder Participation

1 ‘Simple’ risk problems

Routine-based:

(tolerability /acceptabilityjudgement)

Applying ‘traditional’ decision-making Risk-benefit analysis Risk-risk trade-offs

Instrumental discourse

(risk reduction) Trial and error Technical standards Economic incentives Education, labelling, information Voluntary agreements

2 Complexity-induced risk problems

Risk-informed:

(risk agent and causal chain)

Characterising available evidence Expert consensus seeking tools, such as

Delphi or consensus conferencing, meta analysis, scenario construction

Results fed into routine operation

Epistemological discourse

Robustness-focussed:

(risk absorbing system)

Improving buffer capacity of risk target via: Additional safety factors Redundancy and diversity in designing

safety devices Improving coping capacity Establishing high reliability organisations

30 34

RISK CHARACTERISTICS AND THEIR IMPLICATIONS FOR RISK MANAGEMENT (II/II)

Knowledge Characterisation

Management Strategy

Appropriate Instruments Stakeholder Participation

3 Uncertainty-induced risk problems

Precaution-based:

(risk agent)

Using hazard characteristics such as persistence, ubiquity etc. as proxies for risk estimates

Tools include: Containment, ALARA, BACT

Reflective discourse

Resilience-focussed:

(risk absorbing system)

Improving capability to cope with surprises Diversity of means to accomplish desired

benefits Avoiding high vulnerability Allowing for flexible responses Preparedness for adaptation

4 Ambiguity-induced risk problems

Discourse-based:

Application of conflict resolution methods for reaching consensus or tolerance for risk evaluation results and management option selection

Integration of stakeholder involvement in reaching closure

Emphasis on communication and social discourse

Participative discourse

Complementary Phase

Risk Communication


RISK COMMUNICATION –POTENTIAL GOVERNANCE DEFICITS

The most important governance gaps are:

One-way information instead of two-way communication prevents building a dialogue

Certain concerns are treated as irrational and, as a result, those holding them are alienated from the risk handling process (which may cause social mobilisation against the institution)

The communication is not adapted to the category of risks and the stakeholders involved

Low level of confidence or trust in the information given and in the decision-making process weakens the whole process

PREASSSSMENT

• Internal

• Informing other agencies and getting feedback from them (who is affected and how does it relate to their mandate?)

• External

• Media briefing about process to start

• Inviting stakeholders to provide feedback and framing suggestions (if risk appears to load high on uncertainty and ambiguity)

Risk Communication at Different Stages (1)

APPRAISAL

• Internal

• Informing the appropriate scientific departments in other agencies and, if necessary, organize workshops

• External

• Media briefing and announcement to stakeholders that assessment process is on its way (low complexity)

• Depending on degree of knowledge, press conferences or press releases on results (high complexity)

• Conducting hearings, Delphi, or other information gathering techniques with appropriate knowledge carriers (high complexity and uncertainty)


EVALUATION• Internal

• Involving all affected agencies if risk characterisation is either uncertain or evaluation controversial

• External• Press conferences with assessors and managers on

evaluation results and protective measures (low uncertainty and ambiguity)

• Information of stakeholders and invitation for written review (high uncertainty and low ambiguity)

• Deliberation with stakeholders about values/perspectives and assigning trade-offs (high ambiguity)


Management• Internal

• Involving all affected regulatory or government bodies if risk management measures have impacts on their mandate

• External• Press conferences on selection of management measures

(low uncertainty and ambiguity)

• Information of stakeholders about regulatory impact review and, if needed, organisation of hearings (high uncertainty and low ambiguity)

• Engaging in formal deliberations with stakeholders and representatives of the public (high ambiguity)


Beyond communication

Stakeholder and PublicInvolvement

Crucial Questions for Involvement Inclusion

Who: stakeholders, scientists, public(s)What: options, policies, scenarios, frames, preferencesScope: multi-level governance (vertical and horizontal)Scale: space, time period, future generations

ClosureWhat counts: acceptable evidenceWhat is more convincing: competition of argumentsWhat option is selected: decision making rule

(consensus, compromise, voting)

PREASSSSMENT

Shaping the process (consensus on frames)Design Discourse

APPRAISAL

Gathering information and knowledge Epistemic Discourse

EVALUATION

Deliberating around values/perspectives and assigning trade-offs

Reflective Discourse

MANAGEMENT

Weighing pros and cons of management measuresPragmatic Discourse (for low ambiguity)

Participative Discourse (for high ambiguity)

Stakeholder Involvement at Different Stages


Complexity

Epistemic

Use experts to find valid, reliable and relevant knowledge about the risk

Uncertainty

Reflective

Involve all affected stakeholders to collectively decide best way forward

Ambiguity

Participative

Include all actors so as to expose, accept, discuss and resolve differences

Simple

Instrumental

Find the most cost-effective way to make the risk acceptable or tolerable

Agency Staff

Dominant risk characteristic

Type of participation

Actors

STAKEHOLDER INVOLVEMENT

Agency Staff Agency Staff Agency Staff

Scientists/ Researchers

Affected stakeholders

« Civil society »



Affected stakeholders

As the level of knowledge changes, so alsowill the type of participation need to change

The wider context

Organizational Capacity


ORGANISATIONAL CAPACITY (1)

Risk governance relies upon equipping all actors with adequate:

Assets Laws and regulations that establish rights and obligations Resources – financial and physical – to gather information and

act Knowledge – the experience and expertise to best use the

resources Integration – with which to access and deploy the other assets

Skills Flexibility – adapting to change in a dynamic situation Vision – preparedness to think “outside the box” Directivity – being an agent for external change when necessary


ORGANISATIONAL CAPACITY (2)

Capabilities

Relations – links between the actors to create the basis for collaborative learning and decision making

Networks – enhanced links between key actorsRegimes – the structures that create and oversee the

overall process and how all the actors interact


Criteria for Evaluating Governance Performance

Effectiveness (Were the goals of risk management accomplished or are they likely to be accomplished?)

Efficiency (Are the management measures cost/effective?) Legality (Are the risk measurement measures compatible with legal

prescriptions and national/international laws?) Legitimacy (Are the management measures based on due process

and publicly accepted procedures) Accountability (Are all responsibilities for risk management and

liability clear and unambiguous?) Fairness (Is the risk/benefit distribution considered fair and just?) Acceptance (Are the measures approved by the main stakeholders

and the public at large?) Acceptability (Are the measures compatible with ethical and moral

standards?) Sustainability ( Are the measures in line with the goals of sustainable

development?)


ONE RESULT OF A DEFICIT IN ORGANISATIONAL CAPACITY

(AP Photo/Phil Coale)

“The Gulf Coast States have attempted to coordinate contraflow plans with neighboring States that may be affected, but exercises, traffic simulations, and other analyses to evaluate evacuation options for catastrophic incidents on the scale of Hurricane Katrina have not been conducted.”

Catastrophic Hurricane Evacuation Plan Evaluation, A Report to Congress; US Dept of Transportation and Dept of Homeland Security, June 2006

46 34

CONCLUSIONS I

Problems in handling risks: Plural values and knowledge claims Expert dissent on risk and benefits Transboundary nature of risks Social amplification and attenuation via perception and

social mobilization Pressure from globalized economy Lack of organizational capacity in many countries Lack of effective governance structures

Emergence of systemic risk that cross national and sectoral boundaries (ripple effects)

Need for integration of risk analysis and perception

Part V: Conclusions


CONCLUSIONS II

Good risk governance integrates traditional risk analysis with the thorough understanding of how different stakeholders perceive the risk (“framing” and “concern assessment”)

Understanding and acting on how different stakeholders frame the risk is a key factor in the overall success of the process

Categorising the knowledge about the risk as simple, complex, uncertain or ambiguous can help: select a risk management strategy design the process for stakeholder involvement

Using the results of both risk assessment and concern assessment can support a tolerability/acceptability judgement that accounts for both scientific facts and people’s perceptions

48 34

QUOTE

“What man desires is not knowledge but certainty.” Bertrand Russell

Policy makers cannot produce certainty but can help people to develop coping mechanisms to deal prudently with the necessary uncertainty that is required for societies to progress

49 34

EXTRA SLIDES

Transition towards Governance

Evolution of Risk Research

Four stages of development

Stage 1: Engineered Safety

CharacteristicsDeterministic Safety AnalysisRisk = What happens if?Probability exposure over losses (at best)Clear focus on human lives and health

ProblemsMechanical conception of risks and accidentsUncertainties are “ignored”Risk communication only among experts and between

experts and politicians

Stage 2: The New Monarch: PRA

CharacteristicsProbabilistic Safety AnalysisRisk = Function of probability times damageProbability assessment over events and exposureClear focus on human lives, health, capital assets and

environmental damage

ProblemsProbability distribution often intelligent guessesUncertainties are confined to statistical confidence

intervalsRisk communication is designed to bridge the gap

between risk assessments and (biased) perceptions

Stage 2: Probability Theory in Risk Analysis

Actuarial Approach: Statistical extrapolation

Causal Modeling: Determining the pathways from emission to effects

using models of dispersion and transport, dose-response-relationships, exposure assessment, consequence analysis

Probabilistic Risk Assessments:Synthesizing failure rates through fault and event trees

Stage 3: The Rise of Cultural Relativism

CharacteristicsProbability theory is one instrument among othersRisk = social construction of the human mindAll knowledge is created equalFocus on everything that human value

ProblemsDanger of solipsism due to constructivist conceptsUncertainties are confined to beliefs of individuals and

groups (for example subcultures)Risk communication is designed to give voice to those

who have alternative views on risk

Stage 4: Towards Systemic Integration

CharacteristicsAcknowledgement of prospects and limitations of

probability theoryRisk = integration of technical and social conceptsCoping with uncertainty by applying precautionExplicit system boundaries of what is covered

Problems Incompatibility between technical and social approaches

to riskUncertainties are subdivided in aleatory, epistemic, and

indeterminateRisk communication is designed to combine rational

policies with social perceptions and concerns

Requirements for Integrated Risk Concepts Concepts that link risk assessment with risk perception and socio-

cultural processing of riskAvoiding relativist view of knowledge but including social constructions of

risksLink between risk assessment, management and communication

Concepts that link physical risk analysis with financial, economic and social risk;Explore social amplification pathwaysConsider trans-sectoral and trans-boundary ramifications

Concepts that link risk theory with organizational capacity building and management competencySystematic use of management sciences and decision aidingEmphasis on risk communication between and among agencies and

professionals

05-12-06 RISK GOVERNANCE - TOWARDS AN INTEGRATIVE APPROACH 57 34

RISK MANAGEMENT STRATEGIES (I):COPING WITH ROUTINE AND COMPLEXITY

Routine Risk Management Sufficient knowledge of key parameters Little complexity, clear causal knowledge Standard Assessment sufficient Risk-benefit analysis and risk-risk comparisons as basic tool for

evaluation

Risk-Informed Management High complexity of causal risk models Little uncertainty and ambiguity Expanded risk assessment / need for knowledge management Emphasis on robust risk management strategies, i.e. risk

standards including safety factors Emphasis on close monitoring of outcomes

Annex: Back-up Slides

05-12-06 RISK GOVERNANCE - TOWARDS AN INTEGRATIVE APPROACH 58 34

RISK MANAGEMENT STRATEGIES (II):COPING WITH UNCERTAINTY AND AMBIGUITY

Precaution-Based Management High uncertainty or ignorance Adverse effects plausible but quantification not reliable Appraisal of uncertainty by statistical means Goal of risk management: avoidance of irreversible effects Instruments:

– Negotiation between too little and too much precaution– classic: ALARA etc.– new: containment, diversification, monitoring; substitution

Discourse-Based Management High ambiguity Goal of risk management : to find consensus or tolerance Instruments:

– stakeholder involvement– public debate– risk communication

Annex: Back-up Slides