Recast of the European Cosmetics Legislation State of decision making / Outlook

Piet SellkeA closer look at risk perception and risk governanceDialogik and University of Stuttgart

ICPS5th Annual Regulatory Affairs International Symposium

March 11th, 2013

London, March 11th 2013#London, March 11th 2013

1OutlinePart I: Introduction

Part II: Risk Perception and Risk Assessment

Part III: Risk Governance: An Integrated Concept

Part IV: Conclusions#London, March 11th 2013

Part I: Introduction#London, March 11th 2013

Deficits in Risk GovernanceFramingScopeScarcity of dataTransparencyInequityAccountabilityParalysis by AnalysisLack of Trust#London, March 11th 2013

Framing different stakeholders have conflicting views of the issueScope a risk perceived as only local may have global consequences (and vice versa)There is a scarcity of data about the risk or peoples perceptions of it or, if data does exist, there is a failure to accept itTransparency trade-offs are not made explicit and hidden agendas seem to determine the outcomeInequity decisions allot the risk and benefits unfairlyAccountability decision makers are isolated from the impact of their decisionAlienation people or organisations are ignored (can lead to social mobilisation) (also Authority knows best)Lack of trust in the process or the communication channelParalysis by analysis overly inclusive process leads to inertia

4Policy Dilemma in Risk ManagementFollow perceptions of the public?

Follow advice of professional experts?

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5Challenge of Risk Governance Integration of factual, technical knowledge and socio-cultural knowledge into one frameworkFactual dimensionPhysically measurable outcomesRisk discussed as a combination of consequences and their probability of occurence

Socio-cultural dimensionHow risks are viewed if values and emotions come into play

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Part II: Risk perception and risk assessment#London, March 11th 2013

Risk perception (I/II)Human behavior depends on perception, not on facts!Qualitative Risk Characteristics:Risk-related patternsPerceived dreadFamiliarity with the riskSensual perceptibilitySituation-related patternsPersonal controllabilityVoluntarinessTrust in risk managementFair distribution of gains and losses

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Risk perception (II/II)Semantic risk patternsRisks posing an immediate threat (large dams, nuclear energy)Risks dealt with as a blow of fate (natural disasters)Risk as challenge to ones own strenght (sports)Risk as a gamble (lotteries, stock exchange)Risks as an early indication of insidious danger (food additives, viruses)Stigmatisation of RiskSocial amplification of Risk

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9These patterns have functions similar to drawers in a filing cabinet. When faced with a new risk or when obtaining new information about a risk, most people try to file this new information into one of the existing drawers[1]. In addition to the cognitive processing of risk characteristics and risk situations, studies have shown that people tend to stigmatise risk sources that are associated with specific dreadful associations (Kunreuther and Heal 2003). A salient example of stigma is the reaction to products that are deemed to be carcinogenic, although there is often limited, if any, scientific evidence to support this position. The mere suspicion that a substance could cause cancer is often sufficient for generating fear and asking for strict regulatory actions. Stigmatisation leads to a cycle of public outrage and regulatory responses feeding into the process that has been described as social amplification of risk (Kasperson et al. 1988; Kasperson et al. 2003). Stimulated by media reporting, the publics perception of the risk is often amplified in ways that are difficult to explain if one were focusing on the standard elements of any technical risk assessment probability and direct losses.

The problems associated with risk perception are compounded because of the difficulty individuals have in interpreting low probabilities when making their decisions (Kunreuther et al. 2001). In fact, there is evidence that people may not even want data on the likelihood of an event occurring. If people do not think probabilistically, how do they make their choices? Psychological research has revealed the following patterns of drawing inferences about probabilities and risks

Social amplification of risk:Social interactions can heighten or attenuate perceptions of risksRisk behavior is in turn shaped by heightened or attenuated perceptionsBehavior patterns generate secondary consequences (e.g. loss of trust, drop in business sales, repercussions on other technologiesChallenges of Risk Assessment Quality of explanatory power depends on the accuracy and validity of (real) predictionsProblems in validating risk assessment resultsProve of correctly assigned probabilities to a specific outcome difficultRisks with difficult to discern cause-effect relationshipsRisks with rare effectsRisks with effects difficult to interpretVariations in both causes and effects obscuring the results#London, March 11th 2013

10Risk assessment is confronted with three major challenges that can be best described using the terms complexity, uncertainty and ambiguity. These three challenges are not related to the intrinsic characteristics of hazards or risks themselves but to the state and quality of knowledge available about both hazards and risks. Since risks are mental constructs, the quality of their explanatory power depends on the accuracy and validity of their (real) predictions. Unlike some other scientific constructs, validating the results of risk assessments is particularly difficult because, in theory, one would need to wait indefinitely to prove that the probabilities assigned to a specific outcome were correctly assessed. If the number of predicted events is frequent and the causal chain obvious (as is the case with car accidents), validation is relatively simple and straightforward. If, however, the assessment focuses on risks where cause-effect relationships are difficult to discern, effects are rare and difficult to interpret and variations in both causes and effects are obscuring the results, the validation of the assessment results becomes a major problem. In such instances, assessment procedures are needed to characterise the existing knowledge with respect to complexity, remaining uncertainties and ambiguities (WBGU 2000, 195ff.; Klinke and Renn 2002).Integration of Risk Assessment and Risk PerceptionOption 1 (only science): Only scientific concepts of risk can claim inter-subjective validity and applicability (Erroneous) risk perceptions have to be corrected via communication and educationOption 2 (only people): No overarching universally applicable quality criterion available in order to evaluate the appropriatness and validty of risk conceptsScientific concepts should compete with concepts of stakeholders and public groupsLoss of Public SupportLoss of Scientific Expertise#London, March 11th 2013

Integration of Risk Assessment and Risk PercpetionOption 3 (science + people):In identifying aspects of concern and worry, all groups of society have the same right to raise them and to bring them to the negotiation tableQuestion of the degree to which these concerns / worries are violated by the risk-bearing activity / events should be primarily answered by experts

Integrated Approach#London, March 11th 2013

Part II: Risk governance: An integrated concept#London, March 11th 2013

Taking Control in Pensions Planning 19993 May 1999Draft 113CONVENTIONAL RISK MANAGEMENTUnderstanding

Deciding

ManagementCommunicationAppraisalWho needs to do what, when?Who needs to know what, when?The knowledge needed for judgements and decisionsMost risk management processes do not go beyond these steps#London, March 11th 2013

14IRGCs RISK GOVERNANCE FRAMEWORK

Communication

Pre-AssessmentCharacterisationand EvaluationAppraisalManagementCategorising the knowledgeabout the riskUnderstandingDecidingGetting a broad picture of the riskRisk assessment PLUS Concern assessmentIs the risk tolerable, acceptable or unacceptable?Is the risk simple, complex, uncertain or ambiguous?Who needs to do what, when?CommunicationWho needs to know what, when?#London, March 11th 2013

15Phase 1

Pre-AssessmentCharacterisationand EvaluationAppraisalManagementCommunicationGetting a broad picture of the risk#London, March 11th 2013

Taking Control in Pensions Planning 19993 May 1999Draft 116Importance of FramingLooks like a high risk from the outside

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Importance of FramingBut consider this

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Importance of FramingOr this

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

Comparing USA and Europe:

Different framing

Different regulatory approach #London, March 11th 2013

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).

20IMPORTANCE OF FRAMINGFrames represent social and cultural perspectivesChallenge or problemOpportunity or riskInnovation or intervention

Frames determine boundaries of what is included and excludedTime and duration (future generations, sustainability)Location and space (the universe, all nation, Norway, Stavanger)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)

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Taking Control in Pensions Planning 19993 May 1999Draft 121Phase 2

Pre-AssessmentCharacterisationand EvaluationAppraisalManagementCommunication

Categorising the knowledgeabout the riskIs the risk simple, complex, uncertain or ambiguous?#London, March 11th 2013

Taking Control in Pensions Planning 19993 May 1999Draft 122Components of Risk Knowledge

Complexity in assessing causal and temporal relationships

Uncertaintyvariation among individual targetsmeasurement and inferential errorsgenuine stochastic relationshipssystem boundaries and ignorance

Ambiguity Interpretative ambiguity (What does it mean?)Normative ambiguity (Is it tolerable?)

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RISK APPRAISALRisk AssessmentHazard identification and estimationExposure assessmentRisk estimation

Concern AssessmentSocio-economic impactsEconomic benefitsPublic concerns (stakeholders and individuals)#London, March 11th 2013

24BRENT SPAR UNDERESTIMATING STAKHOLDER CONCERN

Greenpeaces 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.#London, March 11th 2013

Phase 3

Pre-AssessmentCharacterisationand EvaluationAppraisalManagementCommunicationIs the risk tolerable, acceptable or unacceptable?#London, March 11th 2013

Taking Control in Pensions Planning 19993 May 1999Draft 126Characterization and EvaluationWhat 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?

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Evaluation and CharacterisationThe scientific evidence from the risk assessment is simple civil aviation emits significant pollutants into the atmosphere. Grounding the fleet would stop those emissions.Modern values particularly economic and societal are such that no decision has been or is likely to be made to ban civil aviation.In this instance, the policy judgement is therefore to give greater weight to the values than the scientific evidence.

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Phase 4

Pre-AssessmentCharacterisationand EvaluationAppraisalManagementCommunicationWho needs to do what, when?#London, March 11th 2013

Taking Control in Pensions Planning 19993 May 1999Draft 129RISK CHARACTERISTICS AND THEIR IMPLICATIONS FOR RISK MANAGEMENT (I/II)Knowledge CharacterisationManagement StrategyAppropriate InstrumentsStakeholder Participation1Simple risk problemsRoutine-based:(tolerability /acceptabilityjudgement) Applying traditional decision-makingRisk-benefit analysis Risk-risk trade-offs Instrumental discourse(risk reduction)Trial and errorTechnical standardsEconomic incentivesEducation, labelling, informationVoluntary agreements2Complexity-induced risk problems

Risk-informed:(risk agent and causal chain)Characterising available evidenceExpert consensus seeking tools, such as Delphi or consensus conferencing, meta analysis, scenario constructionResults fed into routine operationEpistemological discourseRobustness-focussed:(risk absorbing system) Improving buffer capacity of risk target via:Additional safety factorsRedundancy and diversity in designing safety devices Improving coping capacity Establishing high reliability organisations #London, March 11th 2013

30RISK CHARACTERISTICS AND THEIR IMPLICATIONS FOR RISK MANAGEMENT (II/II)Knowledge CharacterisationManagement StrategyAppropriate InstrumentsStakeholder Participation3Uncertainty-induced risk problemsPrecaution-based: (risk agent) Using hazard characteristics such as persistence, ubiquity etc. as proxies for risk estimates Tools include: Containment, ALARA, BACT Reflective discourseResilience-focussed: (risk absorbing system) Improving capability to cope with surprisesDiversity of means to accomplish desired benefits Avoiding high vulnerabilityAllowing for flexible responsesPreparedness for adaptation 4Ambiguity-induced risk problems

Discourse-based:Application of conflict resolution methods for reaching consensus or tolerance for risk evaluation results and management option selectionIntegration of stakeholder involvement in reaching closureEmphasis on communication and social discourseParticipative discourse#London, March 11th 2013

31Complementary Phase

Pre-AssessmentCharacterisationand EvaluationAppraisalManagementCommunicationWho needs to know what, when?#London, March 11th 2013

Taking Control in Pensions Planning 19993 May 1999Draft 132Objectives of Risk- CommunicationEnlightenment: Making people able to understand risks and benefits (and their interactions)

Behavioral changes: Making people aware of potential risks and benefits help them to make the right choices

Trust building: Assisting risk management agencies to generate and sustain trust

Conflict resolution: Assisting risk managers to involve major stakeholders and affected parties to take part in the risk-benefit evaluation

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Risk Communication Essential throughout the processPre-assessmentInforming other agencies and assessing who is affected and who is mandated to take responsibilityInviting views of affected stakeholders

AppraisalRequesting and receiving appropriate scientific advice on the riskRequesting and receiving scientific advice on peoples concerns

EvaluationCommunication of appraisal findings (if they are clear)Involving all affected agencies and stakeholders if risk appraisal findings are uncertain or ambiguousDeliberations concerning values / perspectives and to evaluate trade-offs

ManagementInclusion of appropriate stakeholders in the decision making processCommunication of the decision / regulation / advice#London, March 11th 2013

ComplexityEpistemic

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

Involve all affected stakeholders to collectively decide best way forwardAmbiguityParticipative

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

Find the most cost-effective way to make the risk acceptable or tolerableAgency StaffDominant risk characteristicType of participationActorsSTAKEHOLDER INVOLVEMENTAgency StaffAgency StaffAgency StaffScientists/ ResearchersAffected stakeholdersCivil societyScientists/ ResearchersScientists/ ResearchersAffected stakeholders#London, March 11th 2013

35PART V: Conclusions#London, March 11th 2013

Taking Control in Pensions Planning 19993 May 1999Draft 136CONCLUSIONS IProblems in handling risks:Plural values and knowledge claimsExpert dissent on risk and benefitsTransboundary nature of risksSocial amplification and attenuation via perception and social mobilizationEmergence of systemic risk that cross national and sectoral boundaries (ripple effects)

Need for integration of risk analysis and perception

Communication must be tailored to the risk classPart V: Conclusions#London, March 11th 2013

37CONCLUSIONS II Four risk management regimes should be used to deal with these new risk challenges:simple risk management: standard risk assessmentsrisk-informed management: expanded risk assessments; seeking expert consensus and epistemological clarificationprecaution-/resilience-based management: negotiated safety level under uncertainty; seeking stakeholder consensus and relying on containment and resiliencediscourse-based management: value-based orientation; seeking more public input and stakeholder involvement for interpretative variability and normative controversy #London, March 11th 2013

38sellke@dialogik-expert.deThank you!#London, March 11th 2013

RISK GOVERNANCE GOES MUCH FURTHERCore Risk Governance Processpre-assessmentrisk appraisal-- risk assessment-- concern assessmentevaluation: tolerability / acceptability judgementrisk managementcommunicationOrganisational CapacityassetsskillscapabilitiesActor Networkpoliticiansregulatorsindustry/businessNGOsmediapublic at largeSocial Climatetrust in regulatory institutionsperceived authority of sciencedegree of civil society involvementPolitical & Regulatory Culturedifferent regulatory styles#London, March 11th 2013

40Adequate structure of working groups?Local structures, leading structure?Who is initiating a process as this?What partners does one need?#London, March 11th 2013

New Challenge: Systemic RisksEmergence of systemic risks that are...transboundarysocially amplified via perception and social mobilisationsubject to expert dissent regarding risks and benefitsunmanageable by single organizationsdifficult to communicate#London, March 11th 2013